Prisoner Transfer Agreements
	 — 
	Question

The Lord Bishop of Liverpool: To ask Her Majesty's Government what plans they have to review prisoner transfer agreements.

Lord McNally: My Lords, we have a small number of bilateral arrangements which we keep under review, including on prisoner consent. The UK is a signatory to multilateral agreements for prisoner transfer which would require the agreement of all parties to a review.

The Lord Bishop of Liverpool: My Lords, I thank the Minister for his Answer. Will he look into the case of Steven Willcox who, on transfer from Thailand, is having to serve a 29-year fixed sentence for possession of a small amount of drugs, when a number of other transferred prisoners on much more serious charges are released much sooner? Will he also look into the disparity of treatment between those transferred prisoners on fixed-term sentences that cannot be changed and those on whole-life sentences that can be reassessed, and even reduced, by British courts?

Lord McNally: My Lords, officials of the Ministry of Justice have recently concluded a review of the Anglo-Thai agreement and submissions will be considered shortly by Ministers. The issues raised by the right reverend Prelate will be considered by Ministers when we receive that review.

Lord Corbett of Castle Vale: Will the review explain why some foreign national prisoners are able to serve their sentences in their country of origin and some are not?

Lord McNally: In some cases we have agreements with the countries of origin. Where we do not have agreements, obviously we cannot send those prisoners back. We have recently concluded an agreement within the EU that will come into force on 5 December this year which will extend that two-way process to 27 countries. There is also a protocol with the Council of Europe which extends to 34 countries, so we are building this up. We are seeking other bilateral arrangements which will allow such exchanges.

Lord Avebury: My Lords, while I appreciate that officials are now considering whether amendments to the Anglo-Thai prisoner transfer agreement might be drafted to bring the time British nationals spend in prison following transfer into line with that required by other European countries, what does my noble friend think of the suggestion that we should approach the Thai Government at ministerial level with a view to getting round a table and eliminating all the random variations among sentences served under the present arrangements? Better still, since my noble friend has explained that the US and some other countries refuse a prisoner a transfer when they think that it will result in an unacceptable reduction in the time actually served, could we propose an international conference of states that participate in PTAs to discuss ways of eliminating anomalies that may arise?

Lord McNally: I will certainly take back to my right honourable friend the Secretary of State the idea of an international conference, which I presume would also come within the bailiwick of the Foreign Secretary. The key thing to remember, however, is that the idea of the prisoner exchange is for prisoners to have the right to return-for most British prisoners, to return to Britain to serve their sentence is a considerable advantage in the first place-so the aim is not to second-guess the authorities in countries where they have committed offences. It is important that we keep that in mind.

Lord Bach: We on this side absolutely accept that this is a difficult problem that needs careful handling. While making it quite clear that I am not talking about any individual case-it would be wrong to do so from the Front Bench-I think that the right reverend Prelate has a point, which I hope the Minister and his officials will look into. If someone on a fixed sentence is transferred back to this country, very little can be done in terms of releasing that person earlier than when the fixed sentence finishes, whereas if they have committed a worse offence but are on a whole-life sentence, it is easier to release them earlier. That seems to be a bit of an anomaly, and the Government of which I was a member obviously faced the same anomaly as the noble Lord's Government. Does he agree that that is the general point that needs carefully to be looked into?

Lord McNally: I agree. I am not a lawyer, but I am advised that that is exactly the position we have in this country: the people in jail on very long fixed terms and those on life sentences are treated differently when trying to vary those sentences. I go back to the central issue, which is that the transfer of prisoners home is to allow them to serve their sentences back home, not to benefit from a review of sentences. However, I acknowledge that the points made by my noble friend Lord Avebury and the right reverend Prelate are worthy of review by Ministers. We have now received a submission from officials on this, which we will study along with the remarks made in these exchanges. When possible, we will make the House aware of our conclusions.

Lord Taverne: My Lords-

Lord Ramsbotham: My Lords, when discussing this matter with some overseas territories from where foreign nationals have come, there has always been a sticking point over the length of sentence and the length of time that people might be expected to serve. If people go back from this country, there has been a fear that they might be released before the end of the sentence awarded by our courts. The key part of the sentence that we are talking about is at the end, when people are appropriately resettled into their country of origin. Can the Minister confirm that it is the resettlement end of the sentence which will be the subject of the discussions in the review that he mentioned?

Lord McNally: On this particular matter, no; we are looking at the broad issue. However, it is interesting that the noble Lord should say we are concerned that we send back to their country of origin prisoners who may then be given an easier sentence than the one imposed by our courts. Perhaps I may suggest that that precisely may be the concerns of countries that send our prisoners back. Countries have a right to their own system of justice, and some of them take matters such as drug offences very seriously indeed. When you are resident in those countries, you should be aware of the seriousness with which they view such offences.

Universities: Student Immigration System
	 — 
	Question

Lord Hunt of Kings Heath: To ask Her Majesty's Government what will be the impact on universities of the proposed changes to the student immigration system.

Earl Attlee: My Lords, a consultation on the student immigration system closed on 31 January. It sought the views of all respondents on the effect of the proposals. The results of the consultation, and an impact assessment, will be published in due course.

Lord Hunt of Kings Heath: My Lords, I am grateful to the noble Earl. Last week, the noble Lord, Lord Green, who is Trade Minister, spoke warmly of the role of British educational institutions as export earners. Why is the noble Earl's department undermining that by proposing to cut the number of international students coming to the United Kingdom? Does he understand that this will have a devastating impact on the finances of many of our universities and will do enormous damage to UK interests?

Earl Attlee: My Lords, we are clear that we are not targeting genuine students at universities. The measures that we propose will ensure that the system is more selective for the brightest and the best. We will protect the areas that pose the least risk, including the universities sector, target the areas where risk of abuse is highest and ensure that genuine students will still be able to study at our world-renowned universities. The noble Lord is quite right to raise the issue. International students are vital for our trade position and for our soft power position.

Baroness Butler-Sloss: My Lords, as chancellor of the University of the West of England, I am extremely concerned about the effect on Malaysian students who come to Bristol to do the bar vocational course or the solicitors course in order to go back and better run the rule of law in Malaysia, which is extremely important. When is the Minister likely to know the outcome of the consultation? I shall be in Malaysia next month and will be attacked because of the fear that people there will not be able to get their legal training here to improve the way that they operate the law in Malaysia.

Earl Attlee: My Lords, I very much hope that Malaysian students will not be disadvantaged in the way that the noble and learned Baroness suggests. She can tell them that she will be able to attack me in the House if we get this wrong. We had 31,000 responses to the consultation, many of them online. Our first task is to analyse those responses. We are grateful for the responses from academia.

Baroness Gardner of Parkes: As the Minister will know, citizens of the original Commonwealth countries cannot come here on Commonwealth scholarships any more, because these are not awarded. However, reputable universities can still get visas without any trouble for students who are doing important courses; I think that the Malaysians would be in this category. Is this not aimed more at stopping pseudo-students who are not intending to come to study? In the past, many never even appeared at some of these so-called colleges.

Earl Attlee: My Lords, my noble friend is absolutely right in all respects.

Lord Morgan: My Lords, has not this been seen by Universities UK as a deeply harmful policy to our universities that threatens both their global reputation and perhaps £2 billion of their income? Is not the Government's policy founded on the fallacy that students are considered as migrants-in other words, as permanent rather than temporary residents of this country? Given the Government's policy on university fees, is this not a further serious blow to the well-being of one of the glories of our country?

Earl Attlee: My Lords, I seem to be struggling to convince the House that we are determined to protect our overseas students, whom we value immensely.

Baroness Benjamin: My Lords, I declare an interest as chancellor of the University of Exeter. If international students who are already studying here wish to take a new course, will they be expected to go back home and apply from overseas? The timeframe between finishing, getting their results and enrolling is very short, which will mean that many students will go elsewhere to study and we will lose good will internationally.

Earl Attlee: My Lords, the noble Baroness makes an important point and it is something that we are considering carefully. However, the difficulty that we experience is that students go from low-level course to low-level course, along the lines set out by my noble friend Lady Gardner, without making any academic progression at all and while no doubt working in the UK. It is a difficult point that we shall consider very carefully.

Baroness Howells of St Davids: My Lords, as chancellor of the University of Bedfordshire, I should like to give some figures which I hope will help. International students contribute £75 million per year to the local economy-money which we all agree is needed in Luton. They contribute £5 billion to the UK economy, which in turn generates wealth and jobs, and is equivalent in income terms to that contributed by a major industrial sector. The presence of international students makes courses financially viable, which they would not be if only UK students were recruited. Are these draconian rules really going to affect people who come here without real study value? We will lose good students, who will go to Canada and elsewhere if they have to comply with these rules.

Earl Attlee: My Lords, I am not disputing the figures that the noble Baroness quotes. That is one reason why we welcome overseas students. It is important to remember that comparable states have similar rules. Sometimes our rules are tougher; sometimes theirs are. However, we pay attention to the rules that obtain in similar states.

Airports: Heathrow
	 — 
	Question

Lord Spicer: To ask Her Majesty's Government whether they plan for London Heathrow Airport to continue to be the world's busiest airport in respect of international passenger traffic.

Earl Attlee: My Lords, we are committed to producing a new policy framework for UK aviation that supports economic growth and protects Heathrow's status as a global hub, as well as addressing aviation's environmental impacts. We intend to issue a scoping document in March 2011 setting out the key strategic questions that we are seeking to answer, followed by publication of a draft policy framework for consultation by March 2012.

Lord Spicer: I thank my noble friend for that response, but does he accept that the growth of the British economy will be seriously affected if there is capacity constraint at Heathrow Airport?

Earl Attlee: My Lords, we have made it absolutely clear that we do not support the construction of additional runways at Heathrow, Gatwick or Stansted. We believe that such runways would cause an unacceptable level of environmental damage, undermining our efforts to combat climate change and significantly damaging the quality of life of local communities. Instead, we have established the South East Airports Taskforce with key players from across the industry to explore the scope for measures to make the most of the existing airport infrastructure and to improve conditions for users of Heathrow, Gatwick and Stansted.

Lord Kennedy of Southwark: My Lords-

Lord Clinton-Davis: My Lords-

Lord Borrie: My Lords, does the noble Earl agree that one of the great difficulties that Heathrow Airport has in expanding and trying to keep at least level with our competitor airports on the continent of Europe is the higher air passenger duty that people have to pay when they leave Heathrow for destinations abroad?

Earl Attlee: My Lords, decisions on matters concerning taxation, including aviation, are for my right honourable friend the Chancellor. On 22 June 2010, the Chancellor announced that the Government would explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty and that they would consult on major changes. My right honourable friend will of course take into consideration all shades of opinion.

Viscount Montgomery of Alamein: If the Government wish the UK to have an international hub airport, as we do, why do we not build one in the Thames estuary, which would be a greenfield site, would produce a lot of employment and would have lines that go straight into the European network?

Earl Attlee: My Lords, the department has no plans for a new airport in the Thames estuary or in any other part of Medway or Kent. We want to get the most out of existing airport infrastructure in the south-east, which is why we have established the South East Airports Taskforce.

Baroness Scott of Needham Market: Will consideration of more effective use of the airports include a look at the provision of take-off and landing slots, which currently owes a lot to history and very little to common economic imperatives?

Earl Attlee: My Lords, a future airspace strategy is being undertaken, which includes proposals to enable aircraft to fly in more environmentally efficient ways. For example, the introduction of new onboard and ground-based systems will allow pilots to fly more direct routes and therefore reduce fuel burn and enable aircraft to arrive punctually at the approach to Heathrow, which will provide controllers with much better opportunities to guide aircraft into Heathrow without first placing them in a stack.

Lord Brooke of Alverthorpe: Is the noble Lord aware that the simple problem is that we do not have enough tarmac or concrete at either Gatwick or Heathrow to get more planes in and out? Therefore, we either expand facilities in terms of more tarmac and concrete or we accept that the answer to the Question asked by the noble Lord, Lord Spicer, is that, no, Heathrow will no longer be the busiest airport in the world.

Earl Attlee: My Lords, Heathrow will remain a hub airport.

Baroness O'Cathain: My Lords, what about the second runway at Gatwick? Surely that must be up for a rethink and consultation.

Earl Attlee: My Lords, I made it clear in my initial responses that there would not be a second runway at Gatwick.

Lord Davies of Oldham: My Lords, the noble Lord knows, as do his colleagues, that Heathrow is operating at 97 per cent capacity. He also knows that, at the general election, his party was committed to blocking a third runway, which of course has effects on Heathrow's future capacity. Today he has said that we have a South East Airports Taskforce. Is that the best response that the Government can make after years of policy formulation in this area?

Earl Attlee: My Lords, I think that I have made our policy clear. We cannot carry on increasing the number of airport runways in London and the south-east without adverse environmental effects.

Baroness Kramer: My Lords, the Minister will be aware that the night-flight regime, which limits night flights at Heathrow, comes to an end in 2012. Given the appalling history of consultations at Heathrow-narrow, biased and incomprehensible-will he meet with MPs and local community groups, or will he ask the Secretary of State to do so, so that a consultation is properly formulated, properly specified and meets the needs and purpose?

Earl Attlee: My Lords, I am confident that my ministerial colleagues have meetings as appropriate. On 7 September, the Minister of State laid a Written Ministerial Statement before Parliament on Heathrow operating procedures. That Statement confirmed that the Government would not approve the introduction of mixed mode, disturb the current arrangements for early-morning runway alternation, westerly preference and night-time rotation of easterly and westerly preference, or reopen the previous Government's decision to end the Cranford agreement.

Lord Clinton-Davis: My Lords, I declare my interest as president of BALPA. In view of the Minister's woeful comments, does he agree that there is really no alternative to Heathrow? Uncertainty is inimical to British aviation, particularly as far as passenger transport is concerned. Would it not make more sense to ensure now that the present situation at Heathrow is not imperilled and that the airport is expanded? What viable alternative is there?

Earl Attlee: My Lords, I have to say again that we believe that an additional runway would significantly damage the quality of local communities. It would also cause an unacceptable level of environmental damage, undermining our efforts to combat climate change.

Olympic and Paralympic Games 2012
	 — 
	Question

Tabled by Lord Higgins
	To ask Her Majesty's Government what steps they are taking to ensure that an athletics track remains a permanent feature of the Olympic stadium after the end of the Olympic and Paralympic Games.

Lord Higgins: My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and declare an interest as patron of Herne Hill Harriers.

Baroness Garden of Frognal: My Lords, the Olympic Park Legacy Company is responsible for determining the legacy of the Olympic stadium. Subject to its board's recommendation on the preferred bidder for the stadium being approved by its founder members, the company will move into contractual negotiations with West Ham United Football Club and the London Borough of Newham to agree acceptable terms of lease, based on the bid proposals, which included the retention of a running track.

Lord Higgins: My Lords, I thank my noble friend for that reply. Does she agree that it would seriously damage Britain's reputation and make it difficult for any other sports to bid successfully for major international events if we did not fulfil the obligations we undertook with the IOC regarding the Olympic legacy? Does she further agree that any contract of this kind for the future of the stadium must ensure that the track remains a permanent-rather than a temporary-feature after the contract is signed, that the facilities for field events remain and, more particularly, that the stadium is available on a regular basis for all major athletic events?

Baroness Garden of Frognal: My Lords, my noble friend speaks with great authority, having himself been twice a member of the Olympic team. The points he raises are all highly relevant, and they will form part of the negotiations which are under way. On the specific issue of the track being available for other events, should all the recommendations be approved, it would be possible to bid for the 2017 world athletics championships, for which expressions of interest are not expected until March.

Baroness Trumpington: My Lords, will the Government take steps to eliminate the horse track and everything to do with the equine Olympics at Greenwich and restore Greenwich to its original, beautiful site?

Baroness Garden of Frognal: My Lords, I entirely respect the expertise of my noble friend, but I have to say that that is slightly outside the area of the Question and would perhaps make the subject of another Question.

Baroness Grey-Thompson: My Lords, as may be expected, I applaud the decision to support a legacy for athletics after the 2012 Olympics and Paralympics. I declare an interest both as a member of the board of UK Athletics and as a retired athlete. Now we know that the track will be in place, what specific measures are being taken to support the bid for the 2017 world athletics championships, given the huge sporting and financial benefits that would come to the UK and given that they would present us with another opportunity to inspire a generation of young people to be fit and healthy and to excel at what they do?

Baroness Garden of Frognal: My Lords, I entirely agree with the noble Baroness. On the matter of supporting the bid for the 2017 world athletics championships, at this stage of the negotiations we cannot commit to that because we are still in the process of the bid being considered. I am sure that, if all the recommendations go through, that issue will be high on the agenda for the successful team.

Lord Faulkner of Worcester: My Lords, the noble Baroness will be aware that there has been some cynical press comment that the moment that West Ham United Football Club takes over the stadium after the end of the Olympics, it may well find the opportunity to abandon its commitment to maintain the running track. Is she satisfied that the Government are sufficiently robust in their negotiations to prevent that happening?

Baroness Garden of Frognal: My Lords, I should never believe everything you read in the media. We are confident. In the words of the noble Baroness, Lady Ford, who chairs the legacy company,
	"We are confident that this represents the very best legacy for the Stadium-it's good for the community of East London ... for Londoners ... for the UK taxpayer and it's a good outcome for sport".
	Within the bid, there will be constraints on how the stadium can be used.

Lord Mawhinney: My Lords, does my noble friend agree that it would be a weak and cowardly decision to reverse what the legacy organisation has already decided as far as the Olympics are concerned? Does she take seriously the point made by my noble friend Lord Higgins that this country would never again in the foreseeable future win the right to host any international sporting event if it was proved in this case that our word was not our bond?

Baroness Garden of Frognal: My noble friend also speaks with great expertise in these matters. At this stage of the negotiations, I regret that I must not comment further on this. We are still at a stage in the process where matters have not yet entirely been determined.

Lord Addington: My Lords-

Baroness Billingham: The decision to ensure that the athletics track remains in the Olympic stadium would undoubtedly be right. No one could question that ethically. That was part of the bid, as has already been said, as was the pledge to hold an annual school sports Olympics in that magnificent stadium. How can the Minister reconcile that promise with the total elimination of sport from the curriculum, as proposed in the new Education Bill? Where is the next generation of Olympians going to come from if it does not get the start in school that it deserves?

Baroness Garden of Frognal: My Lords, as I have attempted to reassure the noble Baroness before, this Government are entirely committed to sport for young people. There has been a review of the arrangements for the school sports partnership and there are other ways in which sport in schools and competitive sport between schools and in schools are being encouraged.

Jobseeker's Allowance (Work Experience) (Amendment) Regulations 2011

Housing and Regeneration Act 2008 (Consequential Amendments to the Mobile Homes Act 1983) Order 2011

Mobile Homes Act 1983 (Amendment of Schedule 1 and Consequential Amendments) (England) Order 2011

Mobile Homes Act 1983 (Jurisdiction of Residential Property Tribunals) (England) Order 2011
	 — 
	Motions to Refer to Grand Committee

Moved By Lord Strathclyde
	That the draft orders and regulations be referred to a Grand Committee.
	Motions agreed.

Civil Procedure (Amendment No. 4)Rules 2010

Civil Procedure (Amendment No. 4) Rules 2010
	14th Report Joint Committee Statutory Instruments

Rules of the Court of Judicature (Northern Ireland) (Amendment No. 3) 2010

Rules of the Court of Judicature (Northern Ireland) (Amendment No. 3) 2010 
	14th Report Joint Committee Statutory Instruments

Motions to Approve

Moved By Lord Sassoon
	That the rules laid before the House on 23 December 2010 be approved.
	Relevant document: 14th Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument). Considered in Grand Committee on 7 February.
	Motions agreed.

European Union (Definition of Treaties) (Stabilisation and Association Agreement) (Republic of Serbia) Order 2011

European Union (Definition of Treaties) (Stabilisation and Association Agreement) (Republic of Serbia) Order 2011

Legislative Reform (Civil Partnership) Order 2011
	 — 
	Motions to Approve

Moved By Lord Wallace of Saltaire
	That the draft orders laid before the House on 25 October 2010 and 10 January be approved.
	Relevant documents: 13th Report from the Joint Committee on Statutory Instruments and 4th Report from the Regulatory Reform Committee.Considered in Grand Committee on 7 February.
	Motions agreed.

Pensions Bill [HL]
	 — 
	Second Reading

Moved By Lord Freud
	That the Bill be read a second time.

Lord Freud: My Lords, I would like to pay tribute to those whose diligent work underpins this Bill, in particular the former pensions commissioners the noble Lord, Lord Turner, and the noble Baroness, Lady Drake, and the noble Lord, Lord McKenzie, for his work on the previous Pensions Acts. I am sure that this will be a very interesting and well informed debate.
	It is the nature of the legislative process that this Bill sharpens and defines the Pensions Acts that have passed before. The foundations of the current pensions regime stretch back to Lloyd George's epoch and we strive, as many have done before, to enhance the system and ensure that stewardship of the pensions system in our own era is worthy of our predecessors.
	Even since the noble Lord, Lord McKenzie, stood in this spot in this House in 2008, our pensions landscape has continued to change. In 2008, the Office for National Statistics produced new population projections. If noble Lords would indulge me for a minute, it is worth putting this change into context. In 1981, someone retiring at 65 had on average 16 years in retirement. Today, someone retiring at 65 will spend on average over 21 years in retirement. In future, this is forecast to increase, with some spending half their adult life in retirement. With every new demographic forecast comes a continuing increase in life expectancy.
	The very fact that people are living longer is testament to the many welcome advances made in medicine, in technology and in standards of living. Yet the increase in life expectancy places a great deal of pressure on the pensions system. Despite the policies implemented by the coalition Government that are aimed at restoring sustainable public finances, the Office for Budget Responsibility has projected that the impact of an ageing society could wipe out any progress on deficit reduction. Furthermore, the OBR's projections indicate that if the impact of the longevity challenge is left unaddressed, public sector net debt could reach 100 per cent of GDP by 2050. This is simply untenable.
	Pension reform has traditionally proved the ability of the legislature to build consensus on an issue. We all agree that something must be done; that much is clear. Therefore, as we celebrate the fact that people are living longer, healthier lives, we also have to recognise that we need to establish a fair and sustainable pensions system to meet the inevitable challenges of increasing longevity.
	We need a fair system that provides a decent income for an individual in retirement and distributes the costs appropriately between the generations; we need a sustainable system that acknowledges the changes in life expectancy and adapts to the reality of the society in which we live; and we need a balanced system in which the state, individuals and employers all play their role in achieving a fairer balance between work, saving and retirement.
	This Bill makes amendments to existing legislation by correcting, revising and adding, where appropriate, to ensure that our pensions legislation is up to date and fit for the 21st century. A higher proportion of people are now living to 65 than ever before. Life expectancy beyond 65 is increasing steadily. Yet under existing legislation, the timetable for the state pension age increase to 66 was not due to be completed for another 16 years.
	The Pensions Commission's 2005 report stated unequivocally that,
	"A policy which allows each generation to spend an increasing proportion of life in retirement financed by an increased level of public pension expenditure as a percentage of GDP will be unsustainable in the long run and unfair to subsequent generations of taxpayers".
	In short, the timetable that provided the foundations for the 2007 Act is out of date, since that Act was based on the 2004 ONS projections of average life expectancy.
	Noble Lords will be pleased to hear that 2006 was a golden year for all of us, because in that year the ONS updated its expectancy projections; and compared with 2004, many of us lucky individuals gathered here ended the year nearly a year younger than at the start because of this revision. Of course I am looking at age in terms of how long you are expected to have left rather than how long you have had. No anti-ageing cream or time machine can be as effective as what we saw in that wonderful year. But there is a price. If you take just the cohort of people retiring in 2010, the latest increase in life expectancy equates to an estimated £6.5 billion in cost, in constant price terms, over the lifetime of that single pensioner cohort. Given the scale of these costs, it is simply not affordable to wait to increase the state pension age, and it is certainly not fair to the working-age generation who fund the state pension. As outlined in the Government's command paper published in November 2010, Clause 1 of the Bill will bring forward the timetable to complete the equalisation of women's state pension age with men's by November 2018. We will then raise the state pension age for both men and women to 66 by April 2020.
	Noble Lords may wish to note that increasing the state pension age is something of a trend internationally. Ireland has already legislated for the pension age to be raised to 66 by 2014. Similarly, the Netherlands and Australia are increasing the state pension age to 66 by 2020. There is widespread recognition across the developed world that this is an issue that must be addressed.
	The Government want all pensioners to have a decent and secure income in their retirement. That is why we have introduced the triple guarantee, for example, to ensure that the basic state pension will help to provide a more solid financial foundation for pensioners from the state. But alongside this, the Government must also encourage and enable a culture of individual savings. Around 7 million people are currently not saving enough to meet their retirement aspirations. This means that if we do not address the issue of under-saving now, huge numbers of people reaching retirement will be met with a pension income that is less than they hoped for. It is imperative that we encourage individuals to save for their retirement now rather than as a belated afterthought. The automatic enrolment of individuals into a workplace pension means that people will start thinking about their retirement in good time.
	So, under the Pensions Act 2008, all employers will be required automatically to enrol all eligible workers into a qualifying workplace pension scheme from 2012. For the first time, employers will be obliged to make a contribution to that arrangement. I would describe this as an example of asymmetric paternalism-policy benefitting those who would perhaps not plan ahead but simultaneously allowing choice for those who do.
	The principle of automatic enrolment has already been debated in this House during the passing of the Pensions Act 2008. We are absolutely committed to that principle. The Bill will tweak some of the parameters of the policy to ensure that automatic enrolment works as effectively as possible. This is what was set out in the recent independent review, Making Automatic Enrolment Work.
	We propose a slight increase to the earnings threshold at which automatic enrolment is triggered, aligning it with the basic rate tax threshold. This simplifies the administration by aligning automatic enrolment with existing thresholds that employers use. We believe that this measure will create a buffer against de mimimis contributions without creating a significant contribution cliff edge.
	The Bill introduces measures to ease the regulatory burden on employers by allowing a waiting period of up to three months. This is on the proviso that employers must provide a notice of their intention to invoke a waiting period and workers are able to opt in to pension saving if they wish to do so within this period.
	The Bill also contains a measure to enable employers who are using money purchase schemes to certify that their scheme satisfies the relevant quality requirements. My department has worked closely with employers and industry bodies, including the ABI, CBI and NAPF, to design a straightforward test that will work in practice. The details of the test will be set out in regulations, but this clause sets out appropriate parameters to deliver an easement for employers to continue delivering quality pension provision while protecting individuals.
	As a result of the workplace pension reforms, we expect 4 million to 8 million people to start saving, or save more, in all forms of workplace pension schemes. These savings could make all the difference to a comfortable retirement. To put this in financial terms, we estimate that someone earning £28,000 a year and saving into a workplace pension, with an employer contribution of 3 per cent, could increase their pension pot by an extra £650 a year as a result of the reforms. This will transform the pensions landscape in this country and help steer individuals towards a more secure future.
	Part 3 of the Bill covers occupational pension measures. The Bill amends a few rogue references to the retail prices index in existing pensions legislation to set occupational pension schemes' indexation and revaluation at the "general level of prices". This follows on from the Government's decision to use the consumer prices index, as announced in the emergency Budget. We believe that the CPI is the most appropriate measure of the general level of prices in this country for the uprating of pensions. If noble Lords will indulge me, I shall explain this approach. For example, as only 7 per cent of pensioners have a mortgage, with about 70 per cent of pensioners owning their own homes outright, the Government consider it appropriate and correct to use an index that excludes mortgage interest payments. The CPI excludes these costs.
	Furthermore-a technical matter which I find fascinating-the CPI takes account of consumers trading down to cheaper goods when prices rise: the so-called substitution effect. The RPI does not do this. That does not make the RPI an inappropriate measure, but it makes the CPI a measure that is more appropriate in this instance. Who does not switch brands of teabags or biscuits when feeling the pinch on the wallet? It is basic budgeting. The CPI reflects the changes that people make. Suffice it to reiterate the words spoken about CPI in 2003 by the then Chancellor, Gordon Brown:
	"It is more reliable ... It is more precise".-[Official Report, Commons, 10/12/03; col. 1063.]
	I shall not weary your Lordships now with the details of the methodology behind the two indices and the advantages of that employed by the CPI. The comparison between the two indices is what fuels this debate-the question of which is the most appropriate index for pension payments to reflect inflation.
	We must remember that the key legislation for setting the statutory minima for the revaluation and indexation of occupational pensions is not in this Bill. The Occupational Pensions (Revaluation) Order 2010 was laid in December and came into force earlier this year. Legislation requires the Secretary of State to consider the "general level of prices in Great Britain", not a specific index or a specific price. Furthermore, indexation is aimed at protecting purchasing power, and the use of the CPI does indeed protect an individual's occupational pension from inflation. Noble Lords may also note that any schemes wishing to pay the higher of RPI or CPI are perfectly able to do so. In similar vein, the Bill amends references to compensation paid by the Pension Protection Fund. Provisions are also included to remove the indexation requirement for cash balance benefits.
	The Bill also introduces provisions to allow for contributions to be taken from members of the salaried judiciary towards the cost of providing personal pension benefits. The interim report of the noble Lord, Lord Hutton, found that the value of public service pensions had been increasing following dramatic increases in life expectancy at retirement. The Government have accepted the noble Lord's recommendations that the most effective way to make short-term savings on the cost of public service pensions is to increase member contributions. In view of this recommendation, it is right that judges, like other public service pension scheme members, should begin to contribute towards their own pensions.
	In 2009-10, judges paid £4.3 million in total towards dependants' benefits, compared to a contribution by the Government-and, ultimately, the taxpayer-of nearly £84 million. There is clearly a good reason for members of the judiciary to make a greater contribution if their pensions are to remain fair to them and to taxpayers, as well as remaining affordable for the country. I would therefore argue that the provisions for the judiciary included in the Bill represent a fair, affordable and responsible way forward.
	Indeed, the principle of contribution is already contained within judicial pension schemes. Existing provisions are in place for contributions to be taken from members of judicial pension schemes towards the costs of widows', widowers', surviving partners' and children's benefits. The Bill proposes to extend the contributory principle to cover personal pension benefits, with rates to be set through secondary legislation, consistent with the approach taken for existing contributions. However, judicial office holders who have already accrued full pension benefits will not be required to contribute under this measure. The Bill legislates for this provision to be phased in from April 2012, and the savings on pension costs will make an important contribution to our commitment to deficit reduction.
	I must also acknowledge that esteemed body, the Delegated Powers and Regulatory Reform Committee, which has published a report on the delegation of powers contained within the Bill. The committee commented on one of the amendments, in Schedule 4 to the Bill, relating to the Pension Protection Fund, and it has requested an explanation of the relative financial significance for pension schemes of the PPF levy in comparison with the pension protection levy and the general levy.
	I would be happy to clarify this matter for the House. The amounts to be recovered on behalf of the Secretary of State through the PPF administration levy and the general levy are broadly equivalent. For both the financial year ending 31 March 2011 and the financial year ending 31 March 2012, the PPF administration levy was set to recoup £22 million; for the same periods, the general levy was set to recoup £43 million a year. By comparison, the amounts to be recovered on behalf of the board of the Pension Protection Fund through the pension protection levy are much higher. For the financial year ending 31 March 2011, the pension protection levy was set to recoup £720 million; for the financial year ending 31 March 2012, the levy was set to recoup £600 million. I hope this satisfies the request of the committee.
	The Bill contains several parts, but these parts are joined together by a common thread-readjusting the pensions landscape to work towards a more sustainable system in the face of increasing longevity. I do not need to labour the point about the scale of this challenge: many noble Lords present have contributed richly to writing the book on pensions reform, including taking legislation through this House and another place. I will, however, reiterate that the Bill provides the essential amendments needed to ensure that we have a fair, affordable and sustainable pension system to pass on to the next generation. I beg to move.

Baroness Drake: My Lords, I thank the noble Lord, Lord Freud, for introducing the Bill and I acknowledge his willingness to discuss matters. We are pleased that the Government are pushing ahead with the automatic enrolment of workers into workplace pensions, thereby continuing the reform programme, introduced under the Labour Government, which commanded widespread consensus across political parties and stakeholders. We want to work with the Government to maintain that consensus and to build on it. However, we believe that they should not proceed with the accelerated timetable for equalising the state pension age; that the proposals for the threshold of earnings which trigger the automatic enrolment of workers into a pension have the potential to detract from enabling low to moderate earners to save; and we have concerns about the employers' self-certification and occupational pensions indexation.
	In the face of increasing life expectancy, I accept that raising the state pension age is part of the solution to maintaining a sustainable state pension system that supports private pension saving. I accept that when improvements in life expectancy accelerate at a greater rate than anticipated, it becomes necessary to revisit existing plans. As a principle, however, the manner and timing of any increase in the state pension must give people fair and proper notice and sufficient time to adjust, and ensure that the impact is not unfair and disproportionate for particular groups. The acceleration of the timetable to achieve the equalisation of pension age for women and men, from April 2020 to November 2018, does not meet that principle and breaks the promise made in the coalition agreement not to start increasing the state pension age to 66 for women before 2020. The Government should honour the 2020 timetable for equalisation and focus the acceleration of the timetable for the state pension age to rise from 65 to 66 for both men and women to between 2020 and 2022
	Let me state the nature of the unfairness. Under the Government's proposals, some half a million women will receive their state pension at least 12 months later than they had previously been advised. For 300,000 women born between December 1953 and October 1954, this delay will increase to between one and a half to two years. For 33,000 women born between 6 March and 5 April 1954, it increases to two years. For them, the loss in state pension is around £10,000; for those on full pension credit, the loss is closer to £15,000. These women, with five years' notice of the timetable change, have little time to prepare for their income loss, which is neither fair nor reasonable. The impact of the accelerated timetable is too harsh on women in their later 50s, the poorest of whom will have to wait longer for their pension credit. The argument that women live longer than men, so draw their state pension for longer, is not mitigation for women in their late 50s being given so little time to adjust to their loss of income. It is simply not realistic for women in their later 50s to be able to save sufficiently to address the loss. The introduction of the employer duty to enrol workers into a pension scheme will not conclude until 2017, just 12 months before the start of the move from 65 to 66 in 2018 and 12 months after the start of the accelerated timetable in 2016.
	Women in their later 50s are less likely to be in a pension scheme and more likely to be working part-time, earning low incomes. Many are inactive because of looking after family. Even the Government, in their report A Sustainable State Pension, concede that speeding up the pension age equalisation timetable will not significantly reduce the gap in the proportion of women aged 55 to 65 who are out of the labour market compared to men. Women in their later 50s have fewer savings: the median pension saving of a 56 year-old woman is just £9,100, almost six times lower than that of a man, which stands at £52,800. Although as a result of reforms introduced by the Labour Government, most women reaching state pension age in late 2018 will be entitled to a full basic state pension, they will still have a lower entitlement to additional state pension. Nearly 40 per cent of women approaching retirement are not part of an ongoing marriage so many cannot rely on their partner's income to cushion the financial loss.
	In summary, women in their later 50s, for historic reasons of gender discrimination, will have lower state pension and private savings than men, will have earned less over their lifetime, may have been unable to join a workplace pension, had interrupted careers and are more likely to be carers. This inequality will remain and is exacerbated by the accelerated timetable, which does not give them sufficient time to prepare for their income loss. The fiscal benefit from the acceleration of the equalisation timetable will not impact on the deficit reduction in this Parliament. The savings will start to flow from 2016, when net borrowing is forecast to have fallen significantly.
	We are pleased that the Government are pushing ahead with automatic enrolment, but the changes to the earnings threshold, which triggers a worker's enrolment into a pension scheme, cause deep concern. The Government have set the threshold at £7,475 in 2011-12 earnings terms so that it is aligned with the threshold for income tax. However, the Government's aspiration for the income tax threshold is to raise it to £10,190. If the threshold to trigger auto-enrolment were to rise to £10,190, it would exclude nearly 1 million workers per year from workplace pensions, 76 per cent of whom would be women, with the loss of £40 million of employer pension contributions. Consequently, of the group targeted to benefit from the workplace pension reform, 66 per cent would be men and only 34 per cent women. The earnings threshold for auto-enrolment should be set and maintained in relation to the national insurance threshold, not the income tax threshold. Raising it to £10,100 would not, if I may say so to the Minister, be a slight increase, but directly undermine the objective of enabling low and moderate earners to save, which is confirmed by the Government's own impact assessment and the Paul Johnson review. Nearly half of those in the lowest earning group are in couples, where one works part time and the other full time. The Johnson review says:
	"Many or most very low earners are women, who live in households with others with higher earnings and/or receive working tax credits. These may well be exactly the people who should be automatically enrolled".
	Yet we have a set of proposals that would exclude them.
	A key principle of pension reform is to enable women to build up a pension in their own right. The higher the threshold for auto-enrolment, the less the reforms will work for women. Evidence also shows that earnings are not static and that for many workers, men and women, they can change significantly over their lifetime. Most low earners go on to earn more, so saving will still be very beneficial, because of the continuing contribution to their pension over their working life. The Johnson review presented a variety of evidence to show that relatively few people have persistently low earnings over their lifetime. If the threshold is raised to £10,190, it is not sufficient to say that the impact can be mitigated by those earning below this being allowed voluntarily to opt in. Inertia prevents people from saving, which is why we have these reforms. So it is really not credible to say that the lower paid still have to overcome these barriers but that those earning higher incomes would benefit from auto-enrolment-or asymmetric paternalism.
	A higher threshold disregards how working-age benefits can make it pay to save. Individuals' pension contribution is disregarded from income when calculating entitlement to tax credits. Just over one-third of those earning between £5,000 and £10,000 are in receipt of tax credits. That, for some, can produce an implied tax relief of 50 per cent to 60 per cent, which provides a very positive incentive to save.
	The Bill provides for an employer to certify, subject to a regulatory test, that their company arrangements meet the requirements on minimum pension contributions. Although the Bill proscribes the powers of the Secretary of State in setting the test, our concern is that, in trying to accommodate the good employers, a compliance loophole is created for bad employers. The test is still subject to consultation, and there may be pressure to change further. Although the Johnson review asserts that under the proposed test, based on ONS figures, 92 per cent of workers would match the qualifying earnings, post auto-enrolment an incentive may have been created to reduce basic pay and arbitrage between the 8 per cent on the band of earnings test and the certificate of alternative test.
	I must take the opportunity of this Bill to refer to the decision to use CPI as a measure of increase in the general level of prices, which is estimated to deliver-in estimates revised upwards by the Government-an £83 billion reduction to occupational scheme members' pension benefits over the next 15 years. This change effects a switch of assets and benefits from scheme members to scheme sponsors but does not directly impact the public deficit. While one can see the merits in a change for a limited period, the permanent change will be felt even after the fiscal deficit is long gone. I say this against a background of concern over whether the CPI index is appropriately constructed, given the basket of goods that it captures, notwithstanding the merits or otherwise of an argument on the way in which the mean and the substitution effect is calculated.
	The Bill allows employers to defer enrolling eligible workers into a pension for up to three months and consequently reduces annual employer pension contributions by some £150 million. Given that individuals have, on average, 11 different labour market interactions during their working life, this could add up to nearly three years of pension savings or a 7 per cent reduction in an individual's fund. Will the Government be monitoring the impact of the three-month waiting period and how widespread the usage of that facility will be by employers? Finally, stakeholders need timetable and policy certainty so that they can understand and prepare. The Bill leaves a significant amount to regulation. Can the Minister therefore confirm in writing when the regulations will be available in draft?

Lord German: My Lords, I begin by stating my interest as a pension trustee for the National Assembly for Wales pension fund. I also thank the Library here for its detailed note on this Bill, along with the many organisations and bodies, some of which have been referred to already, which have provided some briefing on and support and criticisms of the matters which are now before us. One must start, I suppose, by looking at the work of the noble Lord, Lord Turner, and his view on this issue, which started in train the changes from which we are seeing some conclusions today. His conclusion was about longer life and I am grateful to the Minister for informing me that I am now a year younger than I was. Perhaps that will mean that I will no longer be able to claim the state pension this year. Maybe the Minister will want to refer to that context later.
	The conception that the noble Lord, Lord Turner, had was that a variety of different tools were available to us to make the necessary changes to deal with the longer time that we are going to be spending alive in this world. The first option was to make pensioners poorer; I think that everyone concluded that that was not realistic-a conclusion which we would all want to share. The second option was that taxes would rise or that there would be cutbacks in expenditure on other public goods and services. There were the options, thirdly, that savings would rise and, fourthly, that retirement ages would rise. His conclusion, which has subsequently been resolved through many debates in this place and the other place, was that there is a range of choices but that a combination of the three factors-tax rises or service cuts, rises in personal savings and rises in retirement ages-is necessary.
	The demographic challenge, which has been referred to, is the fundamental that we all need. From the work that has already been concluded, both by the previous Government and in the commissions that have taken place, I suspect that there is a general acceptance that the number of years should bear some sense of how long we can expect to live after retirement. In other words, there should be a life expectancy general rule which seems to be a thread throughout these changes. That is why we are bound to revisit this matter. The noble Baroness, Lady Drake, said that this is undoubtedly something that we will have to come back to since, if the trend continues, we will have to alter the state pension age.
	However, it cannot be looked at in isolation without including the potential and announced changes to the basic state pension. I come now to the question of deficit reduction, to which the noble Baroness, Lady Drake, referred. She said that we will not see the savings in terms of a contribution to deficit reduction until 2016. What we can do is use some of these changes to assist in ensuring that we have a fundamental review and a fundamentally improved basic state pension. While we have already put in place the triple lock from this April to ensure that pensioners will not be worse off, I have read in the newspapers and other publications that ambitious changes are proposed for the basic state pension. That is a consequence of these measures as well, and I hope we will be able to say something about it at the same time.
	There is, however, the issue of acceleration in respect of one group of women. I call it the acceleration bubble. One group of women will bear more of the brunt of the changes than others-those who were born around 1954. On the shoulders of that bubble, it will affect those born between 1953 and 1956. Those women who are still travelling along the same road as people of roughly the same age will see the horizon moving further away from them faster than those around them will. In the most extreme case under these proposals, two women who were born one year apart could see a three-year difference in their pension ages. The crucial thing about this bubble is the extra working months that some women will have to put in, compared to those who are nearly the same age. That is a genuine concern: there is a cohort of women who will be treated differently.
	While the announced and prospective changes to the basic state pension will assist us, the Government should give careful consideration to this group of women who will be more affected by the changes-those within the biggest area of that acceleration bubble. Rather than say that the acceleration must be slowed down, there are changes that the Government could make for that specific group of women because it is a one-off. They could, for example, start by making exemptions or providing additional support for those who are seriously ill. They could make adjustments to the pension credit arrangements, which might make a difference for that group of women. They could make changes that affected the whole cohort born between 1953 and 1957, rather than only those who were born in 1954. There is a difference of effect between people with different years of birth.
	The Government could also look at some of the other measures that are not a consequence of this Bill but where longevity has produced policy issues that need addressing. The most important of those is health inequalities. Where people live longer, some will do so because of the inequality in their life as a whole. That could be something to do with work opportunities and is usually also to do with poor housing. There are areas that the Government should address in those respects to reduce such health inequalities, particularly in older age.
	On age discrimination, both in and outside the workplace, I welcome the removal of the retirement age. It means that people will be treated with dignity whatever age they wish to work to. A basic state pension should be the crucial tool to take people out of poverty. I hope that the changes which are likely to be announced will provide that help. Fundamentally, we must protect those with disabilities or caring responsibilities.
	I accept the Government's need to remove the cost of auto-enrolment to business as we want to encourage as many as possible to participate. However, as regards the three-month waiting period, the key issue for the Government to address is the right to opt in. The Bill states that you can opt in during that three-month period, but to be able to do so you need to have received clear information from your employer. Is the Minister prepared to consider introducing legislation to enable that information to be provided as of right to people in companies affected by the waiting period? Migrating between jobs also affects auto-enrolment if the threshold is not reached-for example, if you work a different number of hours from month to month and your wages fall below the threshold one month and above it the next. The key issue is whether that three-month period has to be consecutive, or will the waiting period end as soon as three qualifying months have been achieved, even if they are not consecutive? I welcome clarification from the Minister on that.
	One of the big problems with re-enrolment is that there is a two-year period in which an employer can simply return the contributions which a member has made in a pension fund during that period, excluding the employer's contribution. The member does not have the right to reinvest the contributions and re-enrol in the scheme. Members who defer their pensions from these pots are often charged an extra 1 per cent in service charges. Over a lifespan, that can amount to a considerable sum. Is there a role here for the FSA to regulate to ensure that those people get a fair deal? What benchmarking will be put in place to enable a scheme to be approved for auto-enrolment? Clarity is needed in that regard. We need to be given assurances about the quality of a scheme so that a NEST scheme can be compared with others. Employers need to be able to assure their workforce that a quality standard is in place with regard to pension funds.
	The legislation is silent on the previous commitment to remove the contributions cap, which will be £3,600 in 2017, moving up to about £4,270 at present-day prices. In the previous legislation that cap was due to be removed in 2017. I hope that that will be possible because this affects a group of workers who often have very small pots of money which they need to reinvest and who want to avoid the bureaucratic burden of moving their pension pot every time they change job. I understand the concerns of the pensions industry regarding the restriction on transfers to the new pension fund but a balance has to be struck between meeting the needs of the pensions industry and those of the workers and those companies that are paying their contributions to ensure that a fair deal is arrived at which works for everyone.
	As regards the RPI/CPI impact of the Bill, as the Minister said, no housing costs are included in the CPI. He said that only 7 per cent of pensioners have mortgages. However, 21 per cent of pensioners pay rent, which is the other important housing statistic. Pensioners who pay rent and are on low incomes are protected by housing benefit. However, I understand that the Government wish to include some housing costs in future CPI arrangements. I should be grateful if the Minister could tell me when the Bank of England will return to this matter and advise the Government on it. It is welcome, by the way, that there is no override on pension funds where the scheme specifies that RPI will be the measure of increase, and that the Government do not intend to override these private pension schemes.
	It is clear from the figures presented in the impact assessment and by companies and bodies that have advised us on the Bill that some defined benefit schemes may now be able to continue if they switch to CPI. The Pensions Policy Institute believes that this could affect between 20 per cent and 40 per cent of schemes. I hope that the Government will monitor that effect, because it would be useful to obtain a quick evaluation of whether schemes that have been in severe difficulty will be able to retain the rights for their pensioners. The overall change will benefit poorer pensioners, but we may find that richer pensioners have to pay a bit more. I do not know whether other Members of this House consider that to be acceptable or not, but I believe it is the right way to do things.
	I noticed that the noble Baroness, Lady Drake, did not refer to judges' pensions, but I will poke in my toe to test the water. This matter is clearly out of kilter with the current culture of saving for the future, and there is a need for transparency. There is a place not too far from this Chamber where pay awards were made and refused by others on their behalf, and consequently other measures were included in a sort of compensation package that caused a lot of trouble for Members of the other place. It should be clear that if the question is about there being no pension contribution because it is a reflection of a lower salary, it would be much better to improve the salary, and that would be transparent for the public to see. I hope that the Minister can advise us on this matter.
	Finally, this is a compendium Bill, in the sense that it has a broad title-the Pensions Bill-and the Minister might consider other measures that are not in the Bill. One of those is of course the rights of pensioners to receive information from those who manage their pensions on their behalf, particularly the need for an annual report to pension holders and a report that can be passed down the food chain on the risks inherent in the investment strategy of pension funds, whereby those affected by pension change will know those risks. It is a world in which people have little knowledge of what is happening on their behalf. Perhaps if they were given more information, the level of awareness would be raised for those who are about to receive pensions or will receive them in the future.
	In conclusion, this is undoubtedly an area to which we will return. I expect to see changes in the basic state pension, and I expect that the review by the noble Lord, Lord Hutton, of public sector pensions will undoubtedly attract discussion here. As the Minister said, longer life goes on.

Baroness Greengross: My Lords, I declare an interest in that I head up ILC-UK, one of 12 organisations across the world that look at planning for the future in the light of demographic change. I agree with the Minister that, while we all celebrate the incredible changes in life expectancy and we all hope to benefit from them, they present us with enormous challenges that we all must try to meet in a fair, just and realistic way. I am therefore pleased to take part in this Second Reading debate.
	I am sure that all of us in this House would support the aim of getting more people to save for their old age. I particularly welcome the fact that NEST is designed particularly to meet the needs of people who are largely new to pension saving. I am certain that NEST will be a valuable addition to the pensions landscape and I welcome the incorporation into the Bill of the recommendations of the 2012 review team to widen pension provision and to help to keep existing schemes open.
	One good aspect of the earnings trigger of £7,475, which the noble Baroness, Lady Drake, was worried about, is that it should help to prevent employees and employers from making very small contributions. However, while welcoming the Bill, we must be alert to the possibility of unintended consequences. Unless we deal with them, there could be a lot of losers as well as winners, as other noble Lords have pointed out.
	I will make brief comments about the three key areas of the Bill: auto-enrolment and its particular relevance for older workers; raising the state pension age and, in particular, the impact on older women, as has been mentioned; and the move from RPI to CPI and its impact on older people.
	The Bill introduces an optional waiting period for auto-enrolment so that an employer can give an employee notice that their auto-enrolment will be delayed by up to three months. However, to ensure that those workers who have their auto-enrolment deferred are aware of their rights and to encourage consumers to take personal responsibility for their pension saving, it is important that the notice should state clearly that the worker retains the right to opt in to the pension scheme at any time.
	The full implementation of auto-enrolment throws into sharp focus some of the remaining unresolved issues surrounding the NEST proposition. Any amount saved in a personal pension has to be better than nothing and even a small pot may make a difference at the marginal level, where most people are. A minor issue that immediately springs to mind is the fact that transfers to NEST are currently heavily restricted. Allowing an employee to transfer pension pots-especially small ones-into NEST would encourage better pension savings and take away the burden of administering small pension pots from the employer and the pension scheme. I hope that the Minister will consider this point.
	Personal accounts may not be suitable for all employees, particularly for low-earning individuals of 50 and over, as the charging structure of NEST and the phasing in and staging of auto-enrolment and the employer contribution could significantly reduce the size and value of savings pots for those close to pension age, particularly single people. At the same time, depending on overall household income, they could lose their entitlement to means-tested benefits. It is worth considering whether these people would get better value from devoting their funds to other forms of saving, such as ISAs, during their working life. Perhaps the noble Lord will consider that.
	In order to manage expectations and to reduce the risk of disappointment at retirement, would it not make sense to impose the simple requirement on the employer that at enrolment the jobholder would be provided with an annual pension benefits forecast based on their statutory retirement age, which would include the impact that such benefits could have on any entitlement to state means-tested benefits? Such a forecast would complement any state pension forecast obtained from the Pension Service. The jobholder would then have the option to seek further advice and, if appropriate, to opt out of a personal account and consider alternative savings arrangements.
	The raising of the state pension age was due to take effect between 2024 and 2026 but, because it is being brought forward, the timetable in the Pensions Act 1995 will be accelerated so that the state pension age for women will reach 65 by November 2018. The effect is that, although no men will have to work longer than an extra 12 months, half a million women will have to work at least a year longer, as the noble Baroness, Lady Drake, said. Three hundred thousand of those are going to have to work an extra 18 months, while 33,000, born between 6 March and 5 April 1954, will have to work two extra years.
	I understand that deficit reduction is a priority for the Government, but the legislation is discriminatory against women born in 1954. I do not expect that I am alone in having received several letters illustrating this point from people who are, or feel, caught out by this change. It will hit them very harshly but make no impact on the deficit reduction in this Parliament. My concern is that those who will suffer are the most vulnerable women. Many are single; they have not had a chance to accumulate a private pension and will be reliant solely on the state pension. Many will also be unaware of the changes and will not be prepared. We need to give people time to order their affairs. For those who are going to have to work an extra two years, this is very unfair. The changes seem to be contrary to the coalition agreement, which said that any rise to 66 would not start sooner than 2020 for women. Therefore, could Her Majesty's Government consider leaving the increase in the state pension age to 66 until 2020, when under the current timetable women's state pension age will reach 65? I do not know whether the Minister can give me any reassurance on that.
	Although the removal of a default retirement age will be welcomed by those who would prefer to continue working beyond 65, the recent Marmot report on health inequalities in England-mentioned by the noble Lord, Lord German-highlighted the fact that around 75 per cent of the population will not be healthy enough to work until the age of 68. Such figures are a clear argument in favour of more investment in preventive healthcare. If the Government are to succeed in extending the working age without creating inequitable outcomes, they need to place more emphasis on job quality, support for people with care responsibilities and the creation of transferable skills among the older workforce. In addition, not only is ill health a major factor in early retirement but it is more likely to affect lower-skilled workers, who tend to have less generous pension arrangements. We wonder what will happen to those who are forced to retire before the state pension age because of ill health but who do not have access to private or personal pension income to tide them over until they receive their state pension at this later age. Perhaps the Minister can elaborate a little on that.
	Lastly, I wish to make a brief observation on the decision to use CPI rather than RPI as the measure for inflation indexation. As we know, the major difference between them is that CPI does not include housing costs-the effect of mortgage rates or council tax being part of that. Last week, the DWP published an impact assessment of the costs of the Government's decision for members of defined benefit pension schemes. The effect of the move from RPI to CPI for protecting the value of future pensions is to reduce the value of benefits over the next 15 years by £83 billion. As the DWP puts it:
	"The main cost of this policy is to members of private sector DB pension schemes who will see the anticipated value of their pension rights reduced and the value of their total remuneration package reduced in the short term".
	The value of this reduction in pension rights and total remuneration equates to a significant £5.7 billion per annum. For 2 million relevant active members of pension schemes, the reduction in their annual rate of pension accrual is broadly the same as a pay cut of between £2,250 and £2,500 a year on average. That is the implied fall in their total remuneration, including the value of the pension promise made to them by their employer. However, they will not feel it until they retire, when their pensions will be up to 12 per cent lower than would otherwise have been the case in real terms in 2027 and 20 per cent lower in 2050. This is a reduction in the value of pensions to pension scheme members and is a transfer from them to shareholders.
	The changes in inflation indexing that will occur as we move from RPI to CPI will impact older pensioners in particular. According to Age UK's silver retail prices index, the impact of inflation on those in later life is far greater than estimated by official measures. For example, since the beginning of 2008, those aged over 55 have experienced price rises at almost two percentage points above that suggested by headline RPI figures, rising to four percentage points for those over 75. The gap between real and headline inflation over that period has cost the average 60 year-old £620 a year, rising to over £700 for someone aged between 65 and 69. This is mainly down to the different impact that fuel and energy price increases, reductions in savings rates, increases in mortgage interest payments and so on have on older people's, versus younger people's, spending power.
	The Government have said that CPI is a more appropriate measure of pensioners' costs than the RPI but they have not given any detailed explanation of that. I do not agree that it is a better measure. Since 1997, the CPI has, on average, been around 0.8 per cent lower that the RPI. One important reason for this is that it excludes housing costs, as has been said. I believe that the Government should retain the RPI as the main measure to be used where pensions and state benefits are linked to price increases. I hope that the noble Lord can assure me on some of those points.

Baroness Noakes: My Lords, I support this Bill. It is a bit of a ragbag of measures but I think that it has two main themes. The first is the need for pensions to contribute to deficit reduction and, importantly, to the restoration of our economy to a sustainable path for the future. The second is to support the need, which is supported on all sides of the House, to generate more savings to contribute towards retirement.
	I shall start with restoring the nation's financial health. I fully support the proposals in the Bill to increase the state pension age to 66. That is long overdue. Taxpayers currently spend about 5.5 per cent of GDP on state pensions alone. Bringing forward a planned increase of the state pension age will be a useful contribution to controlling the inevitable upward trend in that cost.
	My concern is that increasing the age to 66 does not go far enough and that instead we should be looking at accelerating and extending the current plans to increase the state pension age to 68 by 2046. The Government should be bolder and reflect the fact that life expectancy continues to outpace cautious expectations. Can my noble friend the Minister say why the Government are not using the Bill to go beyond this first step of accelerating the age to 66?
	Last year, the European Commission published proposals to increase pension age automatically in line with life expectancy. Although I do not think it is any business of the EU to tell member states what they should do in this area, I think that it has some promise as an idea. Do the Government believe that there is merit in creating a more automatic link in future so that further increases in state pension age can be a matter of evidence rather than a matter of politics?
	I also support the Government's decision about converging the pension ages of men and women. I support it despite the small transitional impact on some women, to which other noble Lords have already referred and doubtless more will do so. The initial plan to bring women and men into line was far too leisurely. I never understood why women were allowed to draw a state pension much earlier than men, because their life expectancies have always been longer than those of men. Doubtless that was due to some misguided notion about the weaker sex. Your Lordships' House is proof that such ideas are long past their sell-by date.
	Another key aspect of controlling the cost of pensions for taxpayers is dealing with the increasing cost of public sector pensions. Like many noble Lords with an interest in this area, I am looking forward to the final report of the noble Lord, Lord Hutton, later this year. His commission recognises that there has to be some way of controlling the burden of public sector pensions on taxpayers. If most public sector pensions were funded rather than unfunded, I have no doubt that the logical path would be for public sector pensions to follow private sector pensions and move away from defined benefit terms. Since the previous Government took power, the number of active members in open private sector defined benefit schemes has plummeted by about 80 per cent to about only l million people. By contrast, almost all of the 5 million or so active members in public sector schemes are in defined benefit schemes. The Government must deal with this inequality. Taxpayers simply will not tolerate funding public sector pensions at levels significantly beyond the opportunities available to them.
	The real barrier to change is that the majority of public sector pensions are funded on a pay-as-you-go basis. If we shift to a defined contribution basis, we might have to pay out in cash on both bases simultaneously, which is of course impossible in the context of the nation's poor financial position. So I support the initial emphasis on pragmatic ways of reducing the cost of those pensions. This must inevitably involve greater employee contributions, as the interim report of the noble Lord, Lord Hutton, recognised. For this reason, I support the provisions of the Bill which bring judicial pensions into the real world of employee contributions. I hope that the Government will ensure that the contributions will be realistic relative to the very significant benefits which are obtained by members of the judicial schemes. I also hope that the Government will remain resolute when the inevitable judicial lobbying starts and that they will not cave in, like their predecessors.
	Let me turn now to the improvements to auto-enrolment which underpin the policy, which has always had cross-party support, of generating more pension savings. I support auto-enrolment because it should dramatically increase the numbers saving for their retirement but my support has always been subject to the caveat that the very real needs and concerns of employers have to be recognised. If we overburden employers, we will kill jobs, which will defeat the object of increasing work-based pension provision. I do not believe that the previous Government always gave due weight to the concerns of employers.
	The current Government were absolutely right to initiate a review of auto-enrolment, and the changes being made in this Bill are welcome. In particular, I welcome the higher earnings trigger and the optional waiting period, both of which will make it easier for employers to accommodate the new requirement.
	I particularly welcome Clause 10, which introduces alternative self-certification requirements. The noble Lord, Lord McKenzie of Luton, may well recall the many discussions that we held during the passage of the Pensions Act 2008, when I tried, with only partial success, to shift the Government from their stance of requiring private schemes to match the Act's curious calculations at the level of every single employee. The best was very much the enemy of the good, and I applaud this Government's decision to help good private schemes to exist on a much more pragmatic basis. I hope that the Government will also ensure that the impact of phasing does not undermine the good work that they have done in Clause 10 and that phasing can be allowed to go alongside meeting the new self-certification tests.
	My greatest regret is that the Government have not heeded concerns about micro-employers. We are talking about the vast majority in terms of numbers of employers-probably two thirds of the total-but, of course, a far smaller proportion of affected employees. The Government have decided to include micro-employers fully within auto-enrolment, notwithstanding the very much higher cost burdens on them. Many of these people are simply private individuals employing personal staff. Real burdens will be imposed. I am aware that the Government's review recommended no change on micro-employers, but that was hardly surprising given the composition of the review team. I do not believe that flagging and communications, which have been put forward as solutions to the problems of micro-employers, have any beneficial impact. They are bureaucratic activities which will do nothing to reduce the regulatory burden on micro-employers, let alone to reduce the cost of auto-enrolment, and we have to remember that the Pensions Regulator has no experience of dealing with micro-employers. I predict that there could well be a backlash from micro-employers once they understand the requirements. I hope that the Government will keep an open mind and be prepared to be flexible as the impact of this policy unfolds.
	I should declare that I am a sceptic on the value of NEST. I believe that there were alternatives to one big nationalised pension scheme which could have been pursued. I have seen nothing to suggest that NEST will be incentivised to do other than behave like all monopolies-that is, in an inefficient and unresponsive way-but it is not a part of this Bill, and I do not, in many ways, blame the Government for taking the line of least resistance, given the large amounts of money that have already been invested in the development of NEST. We shall see whether NEST justifies the trust that the Government are placing in it.
	The last topic that I would like to address is the use of CPI rather than RPI in revaluation and indexation. First, I support the Government's decision to use CPI to uprate public sector pensions and many benefits. It should provide a welcome contribution to reducing the costs of those items over time. However, as the Minister pointed out, that is not in this Bill. I regret the fact that the Government are not using this Bill to help private sector employers shift from RPI to CPI, and I disagree with the noble Lord, Lord German, on this. If CPI is a proper measure of inflation for the purpose of increasing benefits and public sector pensions, it is difficult to see why the Government have not helped private sector employers to make an equivalent change. The Government know full well that without statutory help it is not easy for employers to make this change, except by very costly negotiation. Having said that, I support the intention of Clause 14 in trying to avoid the ratchet effect on private sector revaluation and indexation when CPI exceeds RPI. I have already mentioned to my noble friend the Minister that the CBI is concerned that this clause may not quite achieve the clear policy intent set out for it, and I hope that he will consider an amendment in Committee to put this right.

Baroness Hollis of Heigham: My Lords, I thank the noble Lord, Lord Freud, for his clear introduction of this Bill and congratulate my noble friend Lady Drake on a very impressive first performance on the opposition Front Bench. I hope, of course, that she will not be on the opposition Front Bench for very long.
	There are two issues for me in this Bill. The first, which has been mentioned by other noble Lords, is women's retirement age. Like others, I have no problem with the equalisation of women's retirement age, but I have a problem with its speed, which is unacceptable. After the Government made the same sort of mess when changing the SERPS widows pension many years ago, we had to add an extra eight years before implementation to allow women the opportunity to rearrange their financial affairs. We have been here before and we should learn from that. As the noble Baroness, Lady Greengross, said, raising the retirement age will require some women to stay two years longer in the labour market-although very few will actually do so because of health, caring responsibilities and so on-or linger on lower benefits and go into retirement in even greater poverty.
	The second issue is NEST, which needs to be made more women-friendly, but I fear that most of the changes in this Bill will make it less women-friendly. I will put three big questions, two smaller questions and a thought to the noble Lord, Lord Freud. The first issue was raised by my noble friend Lady Drake. The Government seek to raise the point at which women enter NEST under auto-enrolment so that they will enter not at the lower earnings limit of £5,204 at which you get credited into the NI system-as was originally proposed-nor even at the earnings threshold, where bizarrely you pay NI but do not pay tax, but instead at £7,475, which is the personal tax threshold. Women earning above the LEL but below about £7,500 will, however, be able to opt in voluntarily.
	The Government's proposals to raise the tax threshold ultimately to £10,000 will have serious implications for the constituency of NEST. Given the proposed threshold of about £7,500 before automatic enrolment, 1 million people-mostly women-who have incomes below £7,500 but at the LEL, will be excluded. If the tax threshold is raised to £10,000, which is around half of women's average earnings, some 2 million people-three-quarters of them women-will not be automatically enrolled.
	The whole point of NEST and auto-enrolment was to nudge into a pension scheme precisely those low-paid and part-time workers who would otherwise not join-that is why we have it. Raising the entry threshold ultimately to £10,000, which is half of average earnings for women, will mean that those most in need will in effect be excluded from NEST. A woman on half of average earnings will have no NEST pension at all, and a woman on average earnings will have only half her earnings covered by NEST. Under Labour, she would have ended up with a pot of £20,000; with a pension threshold of £10,000, a woman on half of average earnings will have no pension at all. The Government intend top allow such women to auto-enrol voluntarily if their earnings are between the LEL-about £5,200-and the current £7,500 threshold, which will ultimately be raised to £10,000. However, NEST exists precisely because voluntary self-enrolment has not worked for most low-paid women, because such women feel that they cannot afford a pension, they think it selfish to save or they cannot access their money.
	In any case, the Government must do more than merely allow those with incomes above the LEL to opt in; the Government must allow all women who earn above the LEL not only to come into NEST at that point but, if they so choose, to contribute on their entire income from the first pound, as in all other occupational pensions. Only NEST excludes potentially half or two-thirds of the income of the poorest women from a pension contribution. I argue that if a woman chooses to contribute, employers must also do so. A woman on half of average earnings could then potentially have a pot of £40,000 after 25 years; under the Government's proposed scheme, she would have a pot of zero. If the Government do not move, NEST will not do what it says on the tin, which is to bring the poorest women, by virtue of nudging them, into auto-enrolment.
	The second big issue around NEST is the risk-a word that we have not heard today-associated with auto-enrolment. We know that a few women should not enrol, especially if they are likely to be on housing benefit and, possibly, on pension credit. The difficulty with pension credit is that, when people are 30 or 50, it is completely unpredictable as to whether they will need pension credit in retirement. If you are partnered in retirement, his income will almost certainly float you off the pension credit threshold; if you are single, divorced, widowed or a cohabitee with no financial interdependence, you will probably lose 40 per cent of your savings to pension credit. That risk is entirely unpredictable for any individual-no one can foresee what their private lives will look like five years down the line, let alone 20 or 30 years on-yet, on such an issue, the household income of many women will depend almost entirely on whether, in retrospect, they made the right decision to enter NEST.
	So what to do? I firmly believe that, in any nudge activity of the Government, the Government have a moral responsibility to build risk out of the situation so that what the Government want for all of us is in the best interests of each of us. How? It is really very simple. We need a new state pension, promoted by the Minister's right honourable friend Steve Webb, at or above pension credit level-the £140 a week proposed by the Pensions Minister-by bringing together the basic state pension, the state second pension and pension credit. With early flat-rating and capping of S2P, that could be introduced by 2020 within the same financial envelope. That is absolutely key because, without it, we have "Hamlet" without the prince.
	Such a pension, based on 30 years of NI contributions, would ensure that almost all women would carry their own full state pension, which, if they are in a partnership, would give them together a family income of £14,000 a year before occupational pensions. That would be a real attack on pensioner poverty, especially that of women. More than that-and relevant to this Bill especially -such a pension would encourage women to save, because it would build out the risk that the value of a woman's savings would be depleted by pension credit, depending on whether she was single or partnered. It would become safe to save. Industry, the financial institutions, the NAPF, women's organisations, patients' organisations and the trade unions have all called for it. I repeat that it could be done within current costings.
	So where have the proposals got to? We were promised a Green Paper at Christmas, which we have not had. Minister, when can we expect that? I support strongly the work by the noble Lord, Lord Freud, on universal credit for people of working age, but a new state pension is the major equivalent reform for people as they face retirement. I failed to persuade my Government of both of these; if the Minister can achieve both, I shall be cheering him on.
	The third major question about NEST is: where has the Government's consultation paper on early access to pensions got to? Poorer women cannot afford rainy-day savings, such as ISAs, alongside pensions. As a result, they usually have neither. If we could develop a joint product such as a lifetime savings account-which was first a Conservative thought-poorer women could have the same advantages as those who are more comfortably off in smoothing, with an accessible slice of their pensions, the possible financial traumas of their working life, from divorce to disability to debt incurred by unemployment. Incidentally, that would be much cheaper than having to borrow from someone else.
	In my view, that would mean earlier access to the tax-free lump sum of 25 per cent, which until last year was accessible at the age of 50 but is now accessible at 55, and which can be drawn independently of drawing the pension itself. Why is it okay for people to spend that lump sum on a conservatory when they are 55 but not okay for them to use it to protect their home from repossession at 45? As I have said, all the research shows that the main reason for women not contributing to a pension is that they think it selfish, but the second reason is that they cannot afford to tuck away that money for 40 years, given that the working lives of women are financially much more precarious than those of men. Therefore, we should make it easy and attractive for them so that, for every pound that goes into an occupational pension-including NEST-75p is ring-fenced for their pension and 25p for a savings slice. They may never need to draw on that, but the fact that they could would encourage them to join NEST. The industry believes that that would encourage the very group that most needs help.
	My other concerns about NEST have been heard in the House previously, but I hope that, given the proposed universal credit, the noble Lord, Lord Freud, may be able to help us. First, what are we doing to help the self-employed? For too long, we have done very little. By what means, if any, can we bring them within NEST, particularly the lower paid? Secondly, what about mini-jobs and pensions? Of the 50,000 women who have a part-time job with earnings below LEL, it is believed-although the stats are not very robust-that something like 15,000 may have a couple of part-time jobs, which, if the earnings from both jobs were added together, would take them above the LEL and bring them into the national insurance system. However, that is not possible at present, because the figures cannot be added together, so such women stay out of the contributory element to the basic state pension and, as a result, may lose the possibility of a full pension.
	I appreciate that the noble Lord, Lord Freud, is anxious to solve this unfairness, so I hope to hear a little more today about how it might be done. The issue is increasingly urgent, because 90 per cent of the latest 200,000 new jobs are part-time. Given that universal credit will rightly encourage mini-jobs and more women may find it easier to build a portfolio of mini-jobs rather than one full-time job, particularly in rural areas, the problem may grow. There needs to be a solution if women who work more than 16 hours a week but in a variety of smaller jobs are to come within the NI system.
	Another issue is orphan assets. For example, a hairdresser may have £20K in NEST as well as two small £2K pots from previous employment. Within NEST, she cannot commute her small orphan pensions, but, equally, those are too small to annuitise. At the moment, from her £24K savings, she may lose £4K entirely. It is a disgrace that this continues. She should be able to bring such savings into NEST at the point of retirement at the very least and hopefully-as the noble Baroness, Lady Greengross, said-earlier than that with a higher contribution cap. I hope that the Minister will agree with me.
	I have one final, somewhat off-the-wall suggestion. We are desperately in need of more social housing. The Minister's right honourable friend Mr Pickles has proposed that most new housing should be paid for at intermediate rents in the social housing sector, which will be financed quite heavily, I suspect, by the DWP's benefits bill-I declare an interest as chair of a housing association, which will certainly do its best to ensure that happens. Alternative finance has conventionally been raised from the banks, but, given the pressure on banks to lend to small businesses and to hoard reserves, it will be increasingly difficult to secure social housing finance from the banks. Indeed, it looks as though things may stagnate altogether. As the Minister will appreciate from his very appropriate City background, could not pension funds-including the hundreds of millions of pounds of new savings that will flow into NEST-be a commercial funder of social housing, which after all, being bricks and mortar, is a triple-A asset? That would add to social housing and would reduce the benefit bill, so there would be a virtuous circle indeed. I wonder whether the Minister could apply nudge here, too.
	The major issue on which we disagree strongly with the Government is the speed with which they propose to change the state pension age for women. The Minister knows where we stand on this, which is against. But I hope that, on the more technical but also important issues of NEST, and its potential interconnectedness with universal credit, the Minister will be forthcoming and constructive. I know that he wants NEST to work, and I believe that he knows what needs to be done.

Lord Stoneham of Droxford: My Lords, the Bill seeks to build on the previous Government's work to implement the Turner commission recommendations. I accept that there will be differences on the details of the implementation but I hope that we will maintain cross-party consensus on an issue which has long-term implications. I congratulate the Government and the ministerial team on the excellent consultative papers we have had in preparation for the Bill. I would have expected nothing less of the current Minister for Pensions.
	On pensions, three fundamental issues need to be addressed, many of which have been covered in the debate. We cannot ignore the pressures of longevity on funding. There has been a severe decline in private sector provision for pensions overall and an emasculation of the defined benefit schemes. The noble Baroness, Lady Hollis, referred to it as Hamlet without the prince, but today's debate cannot also fail to consider the low level of the basic pension which simply supplements the problem of credits acting as a disincentive to saving, an issue to which I will return in a moment.
	Turner highlighted the longevity problem. Everyone appreciates-particularly in this House-improving longevity, but it is a disaster for pension planning. There is no alternative but to raise the pension age-the figures speak for themselves; the intergenerational balance and the social contract between generations demands that attention-and resources should be made available to fund pension improvements. The impact on funding, if we do not deal with this issue, will be disastrous across all pension schemes, whether private, public or in the state sector, and will create huge imbalances and pressures.
	The only question concerns the exact detail of how we implement the change. Clearly, in the development of this Bill there has been a trade-off with the Treasury and I accept that the swiftness of the change places more disadvantage on women than on men. That is unfortunate, as is the fact that in making these changes we are departing from the previously agreed principles of 15 years' notice for women and 10 years' for men. However, the particulars need to be examined as the legislation goes through both Houses. It would be easier if we could spell out what people will get in improved benefits in return for the raising of the pension age in order that this is not seen simply as an exercise in cost-cutting. I shall return to that point in a moment.
	On the second issue, the decline of private pension provision, the figures are frightening. They have accelerated even further than Turner predicted and the current private sector coverage for defined pension schemes has declined from 45 per cent to 35 per cent since 1997. We know that defined benefit schemes have been emasculated. There has been a decline in confidence in funded schemes and people have started looking at alternative forms of savings and moving out of pensions. We know that many defined benefit contribution schemes have been oversold and that only later will people discover the poor returns they are to receive, which will be too late. There is a trend among employers to move towards more flexible, lower contribution schemes; they are moving away from defined benefit schemes and following the trend to flexible benefit structures.
	Effective pension provision means starting contributions early in life, and automatic enrolment may help. In theory, it will help those most in need of pension improvement and where insurance companies are least interested in making provision. State support is needed and the NEST scheme will help, but it is unlikely to transform matters quickly and it is a myth to think otherwise.
	The problem is that the contributions envisaged are actually quite small beer. They may work for those starting contributions early in their working life but they will be of little benefit to the women in their 50s who are going to be most affected by the rise in the pension age. The pots will be small and are hardly likely to provide a very significant pension for those people; and what they do get could well be eaten up by the withdrawal of other benefits.
	This therefore takes me to the other prime issue, that of the basic pension. This is where the previous Government gave us least encouragement in these reforms. Raising the basic state pension, reforming the second state pension and reducing benefits' complexity remain a priority if these changes we are discussing today are to be effective. The earnings link is already a major reform for this Government. It seeks to address the fact that since that link was abolished back in the 1970s, the relative position of the basic pension has declined by about a third, which neither Conservative nor the Labour Governments have addressed. It needs correcting, and it is not simply keeping up with earnings-we now have to try to correct the fact that there has been a fall. I notice that the one area in the coalition agreement dealing with pensions was about deciding what we were going to say and do about addressing this problem, because it is pretty fundamental. It is easier to accept a change in retirement age if there is a direct link to improved pensions and not simply cost savings.
	I was directly involved with Steve Webb in working on our party's proposals for a citizen pension. I hope the Government will use the talents of Steve Webb-one of the foremost pensions experts in this country-to bring in a radical reform of the basic state pension and I hope they will announce the principles for doing this during the course of this legislation. Until we do, we cannot help those in most need of it, who are nearing retirement and are having their working lives extended. Auto-enrolment will be diminished if the effective marginal tax rate associated with reducing credits and benefits undermines the incentives to save and the savings people are making through NEST. If we do not use some of the savings from a higher pension age, we will lose that opportunity forever. Frankly, the Treasury needs to put some petrol in the engine to achieve these reforms.
	When it comes to the detail of this Bill, I hope that we will look at the smoothing of the pension age change; but it should be seen in the context of what the Government are going to do on the basic pension, because that is where the trade-off should be. We should make sure that the higher threshold does not discriminate against women doing more than one part-time job and does not encourage employers to increase part-time work in order to avoid making pension contributions. We must work to improve confidence in, and understanding of, private pension schemes, because these proposals assume quite a massive expansion in such schemes. However, we know from history that that expansion can lead to exploitation and mis-selling. We must therefore protect individual consumers and look very closely at the regulation that will do that.
	Fourthly, we must improve the relative position of the basic pension to illustrate the direct benefit of raising the pension age. Turner, and now Hutton, recognises that pension reform is required. Whether we like it or not, it will require a combination of higher contributions, a higher pension age and some sharing of risk between stakeholders. This basic, technical Bill will deserve all-party support and should be an important component of delivering the coalition's plans for pensions, provided that some of the concerns I have raised are dealt with during its passage.

Baroness Hayter of Kentish Town: My Lords, in thanking the Minister for introducing this Second Reading, I hope he will forgive me for paying particular tribute to my noble friend Lady Drake, for her extraordinary work for many years in this area. The noble Lord, Lord Stoneham, has just talked about the Turner report, but it was of course the Turner, Drake and Hills report-and, had it been alphabetical, it would have been the Drake, Hills and Turner report.
	The aim of the Turner report was to enable a future generation of retirees to enjoy a meaningful income, partly by having worked longer but partly by having saved more, with a little help from the state and the employer. That is an aim that we all support. As for working longer, in 1995 the law equalised the state pension age for men and women and said it should be achieved by 2020. Of course this change hurt only women as it was their pension age that was changed, from 60 to 65. However, more than 25 years were allowed for this change to happen. Then there was the 2007 Act, which was influenced very much by what I have newly named the Drake, Hills and Turner report. It was agreed on a cross-party basis that both men's and women's pension age was to rise first to 66 by 2026, then to 67 by 2036 and, finally, to 68 by 2046. In each case, however, there was plenty of notice and time to plan, especially for women, for whom this increase from 65 to 68 would come on top of the earlier rise from 60 to 65. Overall, the increase of eight years in the pension age for women, phased over that 36-year period from 2010 to 2046, gave effectively a working life to prepare. How different it is with this Bill.
	The first difference is that there has been no all-party consensus. The second is the accelerated rise for women, which we have already heard of, to 65 by 2018 instead of 2020. Furthermore, the pension age for men and women of 66 by 2020 has been brought forward a full six years from the original date of 2026. That is not just a minor adjustment for a small number of people. Some 4.5 million of our citizens face an increase in the age at which they can draw the pension to which they have contributed and which they have anticipated over perhaps 30 years. Some women will have to wait more than a year longer for their pension. Some of those will have got used to the idea of the uplift from the 60-year retirement age only in the second half of their working life.
	I give the example of Linda Murray, who is one of the 500,000 women born between 1953 and 1954. In her words, she,
	"will be confronted by real hardship... It means working a further 22 months before I can draw a pension".
	Linda Murray has worked continuously since she was 16 years old, nearly always full time apart from a brief period when she looked after her mother, and she expected to draw a pension at 60. However, she accepted the 1995 increase, which saw her retirement date set as July 2018, when she would be 64 years and two months. But, as she says,
	"having to wait an extra 22 months at such short notice before I daw a pension is not something I had planned for. I work in a physically demanding job"-
	she says that; it is not me-
	"at a dry cleaners, 46 hours a week just to make ends meet. I have never had the means to save for a private pension. We paid our contributions and assumed we would draw a state pension".
	Even part-time retirement is no longer an option for her. She would need to save at least £12,000 to be able to work part time from the age of 64. I think that the House will understand that, with a take-home wage of £270 a week, saving is out of the question for her.
	Do the Government even begin to understand the predicament of Linda Murray and others like her? I ask the noble Baroness, Lady Noakes, whether this is really someone she wants to have to continue to work, standing on her feet in the dry cleaners 46 hours a week until she is 68. I think that I must have misunderstood what was being said, as I do not think that that is what we would wish on women like that. What Linda Murray cannot understand, although she accepts the original increase, is how the goalposts have been moved with so little warning. I shall read from her words again, as they are worth repeating:
	"Women of my generation have faced years of inequality in the workplace. Many took time out to raise families, and on average we earned much less than our male counterparts. We have not had the same opportunity to build up private pensions, and now we are facing severe financial losses, of between £10,000 and £15,000, without the time or opportunity to prepare".
	Another correspondent, Joy Walters, wrote:
	"I have no problem with the principle of equalisation but this is too fast and has placed an unexpected burden on women of my generation that was not foreseen earlier in our working lives".
	This same Joy Walters will have to wait another 23 months to claim her pension. This is not fair-the word that was used earlier-as it affects women with little private pension and no time to make alternative plans. This is inequality laid on inequality. These women did not have equal pay at the start of their working lives and many were barred from company pensions simply for being part-time. These women have been given only seven years' notice of a further two years' increase in their pensionable age; men, by contrast, were given eight years' notice of an increase of one year.
	Furthermore, under this Bill, as other noble Lords have said, there will be a three-year difference in pension age for women born just one year apart and an even bigger jump from my very lucky generation. I am only five years older than Joy Walters but I drew my pension at the age of 60, while she will have to wait until she is 66. It is Joy and her cohort, the women born around 1954, who have shouldered the burden of the increase in retirement age to equate with that of men. Funnily, when I was young, I thought that equality was going to help my gender. I did not realise that we were going to be the ones who ended up paying for equality, but such it is. It is a gross injustice that this group of women will be subject to a loss of pension greater than anyone else's. Joy Walters wrote:
	"It has been difficult to get used to an increase of 4 years in pension age when we were already middle aged, but we accepted this without complaint. This further unexpected increase of another 2 years has left me devastated".
	What is the cost to women of all this? As my noble friend Lady Drake said, a third of a million women will face an increase of 18 months or more, while 33,000 will have an increase of two years, retiring just weeks before their 66th birthday. These women, who are now in their mid-50s, will lose over £10,000 each. With just seven years to prepare, they have been told that they must work an extra two years. We already know the disadvantage that they have within private pension schemes. As my noble friend Lady Drake also said, the median pension saving of a 56 year-old woman is £9,100-one-sixth of a man's-which probably produces an income of £11 a week. That is not enough even for nice biscuits and teabags, I am afraid. It would be only £11 a week even if the whole of their savings could be put into a pension. I wonder what these women born in 1953 and 1954-the noble Lord, Lord German, referred to them as the bubble-did to upset the coalition so that they are being asked to bear the burden of this policy change.
	There is an alternative. We must give men and women a chance to plan for their retirement, with time to plan and time to save, as the noble Baroness, Lady Greengross, said. No one should be put in the position of having an increase in state pension age of more than a year; everyone, I believe, should have at least nine years' notice. I urge the Government to retain the current timetable for the equalisation of pension age and delay the move to 66 until after 2020. At the very least, they should heed the wise words of the noble Lord, Lord German, in his specific suggestions.
	I turn briefly to the second aspect that I want to touch on-auto-enrolment. Women have always done worse at work and worse at retirement. At work they have had low pay, and many have worked part-time. Fewer are in company pension schemes, and fewer have savings with which to boost their state pension. That is why the Labour Government legislated for auto-enrolment, which is vital for three reasons. First, it covers everyone, particularly the low-paid and part-timers. Secondly, by being an opt-out rather than opt-in scheme, it uses inertia-or the nudge, perhaps-to increase participation. Although it is true that I would have liked it to be compulsory, even that most brilliant Labour Government did not give me everything that I wanted in life. The opt-out nature of auto-enrolment was an important part of the scheme. Thirdly, it means doubling your money. For every pound that the employee puts in, the employer and the Government together then double it. This is a real incentive and a proper recognition of the responsibility of the state, the employer and the individual to put aside money for retirement. As for the question from the noble Baroness, Lady Greengross, about the use of ISAs, I wonder whether those accounts would double one's money as auto-enrolment does. I am sure the Minister will come back to that.
	Finally, there is NEST, for which we have to thank my noble friend Lady Drake. She did so much to prepare for NEST during her chairmanship of PADA, a body on which I served for a few months. It is a brilliant organisation. It is the default pension scheme, so employers do not have to set up or run their own scheme. It has a low cost for members, is open to all employers and has a clear focus on members' interests. It is not a monopoly; it is a choice for the employer. Not everyone has to join. I warmly welcome the Government's confirmation of auto-enrolment and NEST. I congratulate NEST on its progress to date in preparing to open on schedule, within budget and with language and processes targeted precisely at the intended audience: the lower-paid, first-time savers and part-timers. Unfortunately, however, the Government have tinkered with auto-enrolment and will allow workers to wait three months before signing up. This undermines the inertia and means that people will have three months of getting used to their salary before feeling the loss of some of it into a pension scheme. That is just the moment at which they are likely to opt out. Three months may not seem a long time but if people get used to that income, they might be less keen to start paying into a pension scheme.
	As has already been said, increasing the threshold would mean that as many as 6 million people are not eligible for auto-enrolment. Those are exactly the people whom the scheme was engineered to assist-women and part-timers. Even the Government's own impact assessment admitted that the changes, which aimed to ease the burden of employers and industry, are,
	"likely to affect women more strongly than men due to underlying inequalities in private pension provision".
	I rest my case. I urge the Government to think again and, at the very least, if they will not move on the threshold, to give us an assurance that it will not be increased further after this jump, and certainly that it will not go up with the tax threshold. If they do not do this then-in 10, 20 or 30 years-we will find ourselves with another cohort of people with inadequate retirement income.
	I cannot help but note that it was mostly men in the City who got us into trouble over financial debt, yet it is women who are being made to pay the price. Perhaps if there were more women in the Cabinet-maybe women Ministers dealing with this-we would not find so much of the burden falling on women. The Minister used the word "fairness". I am not certain that the Bill is fair to women. I urge the Government to look at the timetable again.

Lord Brooke of Sutton Mandeville: My Lords, it is a particular pleasure for me to follow the noble Baroness, Lady Hayter of Kentish Town, not least because she was so staunch an ally in relation to the City of London during the later stages of the Parliamentary Voting System and Constituencies Bill. She has just made a much better speech than I shall. I am batting higher up the order than I should be.
	I come to this subject as an innocent and shall describe my motivation in a moment, but first I should declare one interest not contained in the Register; namely, that my brother is a retired Lord Justice of Appeal, which will, at least in my view, preclude me from speaking on Part 4 of the Bill. I suppose, given the actuarial dimension of this subject, that I should declare an intellectual interest, which no one in the same condition so far has done, in belonging, like many in your Lordships' House, to that two-decade cohort uncovered by my right honourable friend David Willetts, MP and Minister, who were born between 1930 and 1950, and thus find that the austerity of their upbringing, with its beneficial effect on their health, adds at least four unexpected years to their lives beyond the normal expectations of the mortality tables.
	I call myself an innocent, but a reckless ignoramus might be more appropriate. Briefly, in the dying days of the second 1974 Labour Administration-those halcyon days of the Rooker-Wise amendment-I joined a small band of volunteers under my now noble friend Lady Chalker-then a DHSS shadow spokesman in the Commons-to take an interest in these matters. A co-volunteer, in those days before the big society was christened with a name, was my noble friend Lord Hodgson of Astley Abbotts. My only qualification to join was that a definition I had constructed for the benefit of my own small firm to illuminate the difference in purpose and detail between a 364-or was it a 384?-scheme and a 379 one in the then pensions legislation-the digits come back from long ago-so impressed our auditors at Arthur Andersen that they sought my copyright approval to use it throughout their practice's literature. However, the fall of the Callaghan Government on 28 March 1979 marked the last parliamentary interest I took in this subject through different ministerial responsibilities thereafter.
	Wiser men, especially those who have listened to my noble friends Lord Higgins and Lord Skelmersdale, the noble Baroness, Lady Hollis, the noble Lord, Lord McKenzie of Luton, and the late, great Earl Russell-Conrad Russell-discussing these subjects in the past decade, would maintain their distance from these technicalities, whose language to an untrained eye seems sometimes as arcane as Sanskrit, though to no one's discredit. But for better or worse I regard the reconstruction of a major social part of domestic government, which is being so nobly essayed by my noble friend Lord Freud in this and future related legislation, having as good a chance as any in the spectrum of the coalition's programme of being the monument by which the coalition will be remembered. I do not imagine that I shall myself add many pebbles to that notable cairn, but if one is to be a bystander at the making of history, it is better, if possible, to be an informed one.
	Before leaving the great sweep of history, let me say how apposite it is that this essay, in the French sense, is being conducted by a coalition in which the great Liberal Party tradition of Lloyd George and Beveridge is so vitally and vividly represented. Of the six members of my family who have sat in the House of Commons in each of the six generations since the Great Reform Bill, the first four sat in the Liberal interest, and only my late noble kinsman and myself sat as Conservatives. I do not think that my late noble kinsman, who was in the Clintonian phrase more of a policy wonk than I have ever been, or shall be, would dissent from the felicity of this coalition coincidence.
	What is certain is that we are engaged in the early stages of a massively monumental project. Anyone who doubts it need only go back to the dinner Lloyd George gave on the evening the Third Reading of the 1909 Budget Bill concluded. He gave it for the colleagues who had assisted him at the Dispatch Box during the passage of the Bill. Mischievously, the menu card that evening listed the voting records of those present during the course of the Bill. We think that yesterday's Third Reading was the culmination of a prolonged battle, but the scale of activity in the Division Lobbies during that Bill resembled largely that manoeuvre of my military youth-a tactical exercise without troops. In 1909, 554 Divisions were recorded on the menu card, with Lloyd George heading the role of honour at 462 personal appearances and Winston Churchill concluding it at around 200, with the engaging parenthesis "(twice in pyjamas)". That index of all-night sittings may eventually overtake us on this Bill and its successor universal credits legislation.
	One of the iron behavioural laws of your Lordships' House is that if you put your name down to speak at the Second Reading of a Bill, anyone interested in briefing interested parties will immediately do so. The price you pay is that you then sit through the entire Second Reading debate, however long. I agree that in an emergency you could put your name down and then withdraw it, but you could do that decently only once. I congratulate my noble friend the Minister on, and thank him for, devising a Bill that is intellectually interesting without being incomprehensible to the layman, and which has had the effect of reducing the number of speakers by a third compared with those who will speak on postal services tomorrow. Of course, I am creating a rod for my own back, especially in understandable and reasonable correspondence from women approaching pensionable age, but in other respects the Second Reading duty works effectively, as I did not put my name down to speak until tea time yesterday. Yet Ros Altmann's admirably clear briefing from Saga was put on my desk between 7 pm and 9.30 pm last night. I realise that it is nothing to the torrent that may follow, just as I also realise that my noble friend Lord Freud is, in these cash-hungry days, between a rock and a hard place. Resolving these dilemmas lies ahead of us.
	I do congratulate my noble friend on the ingenious intelligence which has gone into devising the auto-enrolment procedures. I appreciate that it was always the case that the big battalions, the small platoons and their collective champions would react differently to the procedures and that a decently lengthy Committee stage to examine this Bill sympathetically stretches out ahead of us. However, I am pleased that the TUC regards the project at least as well as it would a curate's egg, and, since the TUC approves the principle and resiles only from the detail, it may be an archdeacon's egg anyway.
	I support my noble friend's praise for those who have prepared the Bill. I also congratulate my noble friend on the impact study, especially because it is noticeably not written in Sanskrit. My only whispered dissenting note on the Bill's initial presentation today is best reflected in an episode from my past, when in the 1970s, before I entered the other place, I was responsible for helping Rolls-Royce, then a somewhat inbred company, to recruit the chairman of another FTSE 100 company to its board. After his first board meeting, he took the company secretary aside and said that there had been 55 acronyms in the board papers without an accompanying legend, and that he would not attend a second board meeting unless he was provided with a code. The company secretary was apologetic, and within 24 hours he generated a list of 89 corporate acronyms and their underlying rationale, saying that in a fair number of cases the acronyms had been new to him as well. The problem is nothing like so severe in the departmental briefing, but the explanations are not universally reliable, and it is easier to approach the Sanskrit passages if a Sanskrit dictionary is to hand.
	I look forward to the remaining stages, which have the lure of a seminar. As a penance for not adding more solid pabulum for these proceedings, I conclude with the light relief I was offered by the Treasury when I had to travel the country as Paymaster-General, explaining to British business the obligations placed on it by the Single European Act. This took the form of an illustration of a non-tariff barrier in the context of a level playing field; namely, that in the life insurance industry a British actuary could tell you how many people were going to die, whereas a Sicilian actuary could give you their names and addresses. To be fair, I suppose that in our marvellous continent a Sicilian insurance broker might be similarly mystified by the character in Saki who had to have his 21st birthday three years running because it would have been indelicate for him to move on and up until his mother admitted to more than 35 years. However, all these minutiae are for tomorrow. The Bill is a necessity today.

Baroness Turner of Camden: After that, another Pensions Bill. This time it follows legislation on pensions provision introduced by the previous Labour Government. In passing, I congratulate my noble friend Lady Drake for the way in which she introduced the debate. I support much of the new Bill, but I will draw attention to a few points.
	The new Bill makes provision for auto-enrolment into the National Employment Savings Trust. The requirement for compulsory employer contributions and auto-enrolment into either NEST or an existing good-quality employer-provided pension is very important. Millions of people will for the first time save for a pension. That is a very good development.
	The first part of the Bill deals with the state pension and state pension ages. It introduces equalisation for men and women. This was expected, as was the increase in the retirement age. The timetable set out in the Pensions Act 2007 was between 2024 and 2026. In the Bill, the timescale has been brought forward. For women, the SPA will reach 65 by November 2018 and 66 by April 2020. There will be equalisation for the sexes. A number of noble Lords have already drawn attention to the difficulty and unfairness that might be imposed by this arrangement on women born in 1954. I hope that their comments will be taken on board by the Minister.
	Increasing the pension age will affect poorer people most, since they are much more likely to rely solely on the state pension. Those who are better off will have other resources such as an occupational pension or other means and will not be much concerned about the state pension age.
	Of course, many people want to continue working after the current retirement age. They will include many-mostly men-who have jobs in which they are deeply interested. That is fine, but not all jobs are the same. It is in no one's interest for older workers to continue in employment that is physically demanding: construction is one such industry. It might not even be safe to continue employing older workers in such work. Retirement would be better, unless lighter work could be found. Many women who have done heavy, uninteresting and exhausting work will not welcome the idea of having to work until 66 before they get their state pension. There is a case for flexibility.
	There may also be some disadvantage for disabled people, since the Bill indicates that their entitlement will be based on pensionable age and, under the new arrangement, that will be much later. I am sure that nobody would want to disadvantage disabled people through changes in the pensionable age.
	Last year, the Government announced the triple guarantee to increase the basic state pension by the highest figure of earnings, prices or 2.5 per cent. This is very welcome, although not quite as good as it appears. For many years I have urged that the state pension should be increased in line with the wages index. My late friend Lady Castle was indefatigable in her campaign for this, but we did not succeed. Had it been introduced many years ago, pensioners would be much better off now. The wages index now is relatively flat; in fact, many wages are going down rather than up. Moreover, the Government are using the consumer prices index rather than the retail prices index as their chosen measure. It does not include housing and a number of other items, and produces a much lower amount. Over the years, provided that the economy improves, the wages index may produce higher figures, so I hope that pensioners may profit in future. However, they will not profit much now, particularly since the rise in inflation is having a dire effect on many household incomes.
	The second part of the Bill relates to auto-enrolment, which, as I said, I welcome. However, I do not know why there should be an optional waiting period of up to three months before an employee must be enrolled automatically into a workplace pension. Employers must make sure that employees know from day one that they have a right to enrol and to receive the employer's contribution.
	I am not sure about arrangements for transfers in and out of NEST. Many people in a working life could build up an entitlement to a number of pension pots. Is it intended that it will be possible to make arrangements for transfers in and out of NEST? Employers' contributions are rightly regarded by employees as part of a deferred salary package, and it should be wrong for employers to have the right to reclaim them.
	Returning to the question of indexation, the Government have unilaterally decided that CPI should be applied rather than the retail prices index in regard not only to the basic state pension but to the state second pension, public service pensions, many occupational pensions, pension protection compensation payments and the financial assistance scheme. I understand that it cannot apply to private occupational pensions if increases in line with the retail prices index are covered by contract. However, everyone else is likely to lose out and that does seem very unfair. I understand that certain public sector employees have already been advised that that is on the cards and that their future increases will be in line with the CPI. My sister, who is a retired teacher, has told me that she has already received a notification to that effect regarding her pension. Why should employees, through no fault of their own, lose accrued pension rights? I hope that the Government will be persuaded to reconsider this.
	Therefore, there are issues which could be pursued further in Committee but there is much to welcome in the new Bill-particularly the arrangements for auto-enrolment. As everyone knows, we have an ageing population, as has been referred to by everyone who has spoken in the debate. It is vital, however, that resources are available for people's final years to be spent in dignity and without the fear of grinding poverty, which has been the fate of many working people in previous generations.

Armed Forces: Redundancies
	 — 
	Statement

Lord Astor of Hever: My Lords, first, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Private Martin Bell, 2nd Battalion The Parachute Regiment, Ranger David Dalzell, 1st Battalion The Royal Irish Regiment, Warrant Officer Class 2 Colin Beckett, 3rd Battalion The Parachute Regiment, Private Lewis Hendry, 3rd Battalion The Parachute Regiment, and Private Conrad Lewis, 4th Battalion The Parachute Regiment, who were all killed on operations in Afghanistan recently. My thoughts are also with the wounded, and I pay tribute to the courage and fortitude with which they face their rehabilitation.
	With the leave of the House, I shall now repeat a Statement made in the other place by my right honourable friend the Secretary of State for Defence:
	"As a result of the strategic defence and security review and the comprehensive spending review, it has sadly been necessary to plan for redundancies in both the Civil Service and the Armed Forces. At all times this should be done with sensitivity to the individuals concerned, with an understanding of the impact that this will have on them and their families.
	There are two cases where this has not happened recently. Let me deal with them both. The first concerns the 38 Army personnel who have received an e-mail, as reported in today's press. This is a completely unacceptable way to treat anyone, not least our Armed Forces. The correct procedure was not followed. I regret this and want to reiterate the unreserved apology already made by the Army and on behalf of the Ministry of Defence. Arrangements have already been put in place to ensure that this does not happen again, and the Army is already investigating the particular circumstances.
	The second case concerns the redundancy of trainee pilots. It was always going to be the case that, with fewer airframes, we would need fewer pilots. The fact that they found out through the publication of inaccurate details in a national newspaper will, I am sure, be deprecated by both sides of the House and can only cause the individuals concerned undue distress. I understand the concerns of those facing redundancy and the temptation of those in Opposition to exploit every issue to political advantage but I hope that, with issues as sensitive as individual redundancies, we can refrain from making a sad situation worse for the individuals and their families".
	My Lords, that concludes the Statement.

Lord Tunnicliffe: My Lords, I and these Benches wish to join in the sincere condolences to the families and friends of Private Martin Bell, Ranger David Dalzell, Warrant Officer Class 2 Colin Beckett, Private Lewis Hendry and Private Conrad Lewis. Like, I am sure, everyone in the House, I share the sentiments of the Minister about the grave impact that these operations are having not just on those who die but on those who are seriously injured. They put themselves in harm's way on our behalf.
	Yesterday, the Opposition chose not to take a Statement on Afghanistan because we are working in a largely bipartisan way with the Government on Afghanistan. I commend the Minister for the efforts that he makes to keep interested Ministers so well informed of what is happening and I decided that it was inappropriate to take the time of the House on that issue. I can assure noble Lords that we will continue to work with the Government on a bipartisan basis in this important area.
	The same does not apply to the events of the past couple of days. I note the Statement that has been repeated in the House. I welcome the fulsome apology about the 38 warrant officers, but I note that we only deprecate the article in the Daily Telegraph. I think the Government should go further. Short of this article being a figment of the Daily Telegraph's imagination-I doubt it can be, given its usual care-the Ministry of Defence is responsible, one way or another, for a leak which will have been profoundly hurtful to the people involved. I hope that the Minister will be able to make a rather more fulsome statement in his response to this event.
	What assurances can the Minister give us that this will not happen again? It is important in this difficult period that Ministers take personal responsibility for this difficult area of managing personnel, ensuring that statements are made in an orderly way, that proper discipline of information is maintained, that there is proper support and that people hear bad news from those who should be giving them bad news; for example, those in their chain of command. I hope that the Minister can go further in his assurances about how these events will be prevented from happening in the future.
	However, I feel that these events are not just in themselves sad and wrong but that they are actually symptoms of the SDR. It was done too quickly. The document turned out to be a simple Treasury-forced cuts exercise. It was ragged and, if we are to believe newspaper reports, not fully worked through. It is not the job of the Opposition to lay out how we would run the country, but it is our job to comment and to hold to account. We believe that the deficit is being reduced too deeply and too fast. We fear that what we have seen over the past couple of days are symptoms of chaos occurring in the Ministry of Defence. The redundancies of which we have heard seem to have been crudely worked out, inefficient in their long-term effects and, of course, executed in a grossly insensitive way. What assurances can the Minister give us that we are not creating holes in our medium and long-term capability? What assurances can he give us that these redundancies have been thought out with the care that should have been applied to the cutting of resources in the incredibly complicated world of defence? Will he be able in future to make those cuts in a way which assures us of that all round capability?
	I hope that the Minister, perhaps repeating a Statement made by the Secretary of State, will be able to come to the House in the not-too-distant future to make a Statement on that very big task: 17,000 service personnel are to go; 25,000 civil servants are to go-that is 29 per cent. Knowing, as I do from my previous experience, the sheer complexity of the Ministry of Defence, I fear for our military capability if that is not done in a thoughtful, careful way. I hope that the Minister can give us some assurance on that and some promise of a future more detailed Statement about how redundancies will occur, how they have been thought through and where they will occur.
	Finally, I turn to the issue of morale. From this Government, our brave men and women have seen cuts in pensions, cuts in allowances, pay freezes, a most amazing U-turn by the Prime Minister on his commitment to put the military covenant into law and, finally, this fiasco. What is the Ministry of Defence going to do to arrest the inevitable erosion of morale that these events will have brought about?

Lord Astor of Hever: My Lords, first, I am very grateful to the shadow Minister for reasserting the bipartisan approach to Afghanistan. That is very important for our national security and for the morale of our Armed Forces.
	Turning to today's Statement, I agree with the noble Lord that it is completely unacceptable for members of the Armed Forces to be treated in this manner. No one should ever be informed that they are to lose their job by e-mail. The Army's procedure of informing its personnel through the chain of command has clearly failed in this case. The Secretary of State has demanded a full explanation from the Army as to how that was allowed to happen and how those personnel were not told first in person by their commanding officers. Immediate measures have been put in place to ensure that that cannot happen again.
	The noble Lord asked about the SDSR. It was difficult and was completed under challenging timescales. It was carried out in full consultation with service chiefs, and provided the appropriate vision for defence to 2020. We would prefer not to be making reductions in our Armed Forces, but the economic position we find ourselves in unfortunately requires that. As for the overall reductions, the SDSR announced 17,000 service reductions and 25,000 civilian reductions, managed through natural wastage and redundancies. As for the redundancy plan, a full plan is in place for the military redundancy programme, with full information available to all service personnel to make decisions for themselves and their families as soon as it is available. There will be an initial voluntary early release scheme for MoD civilians in the coming financial year. That is under different terms from the Armed Forces programme.
	Finally, the noble Lord mentioned the very important issue of morale. There is little doubt that the uncontrolled and inaccurate release of information through the press, bypassing the normal chain of command, does very little to improve morale.

Lord West of Spithead: My Lords, my question relates to lessons learnt. I was in charge of naval manning in the early part of the 1990s, just after a major redundancy package. All the training pipelines had been shut down, cut or curtailed, and all recruiting had been stopped. All of these things were being done to reduce manpower levels as a result of the then Government's peace dividend, as it was called. I found it was very hard to kick-start recruiting programmes and training pipelines, and the growth of the economy in the late 1990s led to a net outflow from the service. It was so difficult. My noble friend touched on this, but can the Minister assure the House that we have learnt the lessons-I know they were written down by all three services-and that we are not discarding our seed corn? From what one has seen so far of the pilot thing, it seems that we are discarding seed corn, and I hope it will not happen more generally because, if we are, we are in danger of making the same mistakes again.

Lord Astor of Hever: My Lords, I can assure the noble Lord that of course lessons have been learnt, particularly by the unfortunate person who sent the e-mail. As far as recruiting is concerned, the Armed Forces depend upon high-quality young men and women wanting to join for a rewarding and exciting career. The level of recruiting will be reduced, but I can assure the noble Lord that it will continue.

Lord Selkirk of Douglas: Can my noble friend say whether his Statement applies to senior officers and the Gurkhas?

Lord Astor of Hever: My Lords, the redundancy programme will apply to all Armed Forces personnel at one-star rank-that is Army Brigadier-equivalent-and below. Senior officers have different terms of service, being employed on a posting-by-posting basis and will therefore leave under different terms outside the redundancy programme, including termination of service without additional compensation.
	Gurkhas are employed on exactly the same conditions of service as all other personnel and will be considered equally alongside their peers if there is a requirement to reduce personnel.

Lord Davies of Stamford: Irrespective of the incompetence and insensitivity with which these redundancies have been handled, for which the Government have quite rightly and properly apologised, the redundancies of uniform personnel are surely disgraceful and quite irresponsible in relation to the country's future defence capability and needs, and quite shameful in the way that so many individuals have been treated. Will the Minister assure the House that at least those who have served, are serving or will serve in Afghanistan will not subsequently be subject to this redundancy programme? Surely, even this Government recognise that it would be monstrous if people were asked to risk their lives in Afghanistan and were unceremoniously sacked when they came home.

Lord Astor of Hever: My Lords, I can assure the noble Lord that personnel on, or preparing for, operations in Afghanistan will not be made redundant unless they wish to be.

Lord Lee of Trafford: My Lords, I join these Benches in the earlier tribute and acknowledge the very fulsome apology that my noble friend made in regard to these two very unfortunate incidents. I have considerable sympathy with my noble friend and Ministers given the black hole that they inherited, the financial reductions that are, unfortunately, having to take place and the effect they are having within MoD and on our services. It is quite obvious that there are a lot more negative announcements to come. I appeal to my noble friend to look ahead with Ministers and block together some of these negative announcements. There is nothing worse than having a daily drip, drip of negative announcements, which will clearly have a very deleterious effect on morale and recruitment, let alone the effect on any potential enemies that this country might have. Overall, are we now not looking to the Prime Minister to give a much clearer and firmer commitment to an increase in defence expenditure from 2015? Otherwise, it is almost impossible for the MoD to plan properly.

Lord Astor of Hever: My Lords, on the point about the drip-drip, my noble friend's suggestion is excellent and I will take it back to the department. On the extra money post-2015, the Prime Minister is on record as saying that he understands that we will need substantial sums post-2015 to make Vision 2020 work.

Lord Touhig: My Lords, I think that the Minister has understood the mood of the House perfectly well, and I congratulate him on reminding us before he repeated the Statement of the sacrifices that are being made by British servicemen in defence of our freedom. On our Armed Forces, I have always taken the view that our most valuable assets are not pieces of kit and platforms but our service men and women. The Minister said that the Secretary of State had ordered an inquiry into this debacle. Can he tell the House that there will be a further Statement following the completion of that inquiry?

Lord Astor of Hever: My Lords, unfortunately I cannot give the noble Lord that assurance. One of these matters is for the Army and one is for the Royal Air Force. They are conducting internal inquiries, and we will make a decision depending on what they come up with. The investigation into the Army leak will report very quickly-within a maximum of two weeks, and, I hope, within a matter of days.

Lord Ashdown of Norton-sub-Hamdon: My Lords, it is not necessary to agree with the noble Lord, Lord Tunnicliffe, that somehow or another the armed services could have been excused from the cuts that unfortunately the Government had to tackle with urgency as a result of the economic situation that we were in. Nevertheless, it can be accepted, as I hope the Minister will, that there is something in what the noble Lord said: that this was symptomatic of a deeper problem. Is not that deeper problem, frankly, that the MoD is no longer fit for purpose? It is not fit for purpose because the previous Government failed simply, consistently and over many years to deal with deep dysfunctionalities in that organisation? Does that not place on this Government the urgent need substantially to review the whole Ministry of Defence in order to solve what is basically a broken organisation?

Lord Astor of Hever: My Lords, I assure my noble friend that that is exactly what we are doing. I have sat through interminable meetings to try to get on top of this situation, and I assure him that the new PUS is determined to get on top of our financial problems as quickly as possible.

Lord Stirrup: My Lords, the Minister referred to the Prime Minister's very welcome assurance of his personal commitment to a real-terms increase in defence spending over the period of the next spending review. Will the Minister tell us precisely what financial assumptions the Ministry of Defence is now making in its forward planning for that period? On what sums is it basing its calculations?

Lord Astor of Hever: I think that I will write to the noble and gallant Lord about that. I am sure that I have those figures in my briefing, but it would take a bit of time to find them and I do not want to test the patience of the House.

Lord Elton: My Lords, there are practical consequences in the short and medium terms. Will my noble friend assure the House that the impact of the redundancies that are now being revealed will not be an increase in the already ferocious number of combat flying hours of personnel in Afghanistan?

Lord Astor of Hever: My Lords, I can give my noble friend that assurance. The SDSR was designed specifically not to affect operations in Afghanistan.

Lord McFall of Alcluith: My Lords, a bald e-mail that states, "Start applying for your retirement", is indeed indicative of a dysfunctional system in the MoD. The Secretary of State in the other place earlier today failed to take ministerial responsibility for this, which we regret. Instead of barbs with puerile comments, would it not be correct for the Secretary of State to take that ministerial responsibility and report back to this House so that we could say that this military covenant will not turn into a shambles?

Lord Astor of Hever: My Lords, with the greatest respect, this was one very unfortunate error by one individual in the Army-the noble Lord mentioned the e-mail today. In the Ministry of Defence, we go to enormous lengths to make sure that redundancies are carried out correctly, and this happens in almost every case.

Viscount Slim: My Lords, if one goes a little deeper, the noble Lord will recall that when he was in opposition, during the time of the previous Administration, the position of a commanding officer was gone into in considerable detail in your Lordships' House and in Committee. The purpose was that most of us were very put out by the fact that the authority of a commanding officer was being denuded. The noble Lord might agree that this incident, as I understand it, of bypassing a commanding officer and directly talking to a warrant officer will have a very adverse effect on commanding officers in battle on operations. In the examination that the noble Lord has said is going on, I hope that the position of the commanding officer of a unit-the key man in any operation-is not being denuded or his authority removed in any way whatever.

Lord Burnett: Hear, hear!

Lord Astor of Hever: My Lords, I share the noble Viscount's views 100 per cent about the importance of commanding officers. I can give him the assurance that we do not intend to do anything to undermine that position. The investigations are matters for the Army and the Royal Air Force. It would be quite wrong for the Secretary of State or me from this Dispatch Box to make any promises or decisions and try to micromanage what the Army and the Royal Air Force do.

Lord Gilbert: Perhaps I may make it clear that I-and I am sure that I speak for most Members of this House-attribute absolutely no blame in this matter to the Minister. He is in a very unfortunate position at the Dispatch Box today and he is handling himself with great dignity. However, on the recruitment of fast jet pilots, given the number of years that it takes to train one of these brave young men to the height of the necessary skills, and given that this Government's policies are supposed to come to fruition in roughly the same amount of time, how are we to have any confidence that the Government have confidence in their own economic measures when they are laying off those people? They will have investment and talents that will come to fruition at just the time that they claim their economic policies will succeed.

Lord Astor of Hever: My Lords, I share 100 per cent the noble Lord's views on fast jet pilots. Last week, I was fortunate enough to go to RAF Coningsby to see the hugely impressive work of the Typhoons. But, due to the reduction of the RAF's aircraft fleet, the number of student pilots in the flying training pipeline will unfortunately be reduced by about 170 personnel. We will endeavour to find alternative positions, where available, within our branches, such as personnel support, engineers or logistics. However, I must make clear that there will be the need for redundancies. As these pilots are under training, it will not impact on operations.

Lord Brooke of Sutton Mandeville: My Lords, in the context of morale, will my noble friend share with the House how he thinks that the silent majority, to which some in your Lordships' House like me belong, can do more than is being done to help improve morale in the field?

Lord Astor of Hever: My Lords, that is a very interesting question. I cannot think of an instant bright answer, but I will cogitate on it and come back to my noble friend.

Pensions Bill [HL]
	 — 
	Second Reading (Continued)

Lord Woolf: My Lords, I shall speak about Part 4. I do so with some hesitation after hearing the very interesting and informative speech of my noble friend Lord Brooke, who indicated that, as his brother was a distinguished judge, it might not be right for him to take part, albeit that the judge had retired. I am afraid that I am in exactly the same position as his brother, but, having looked at the Bill, I do not think that I need take that action, though the House may regret that I reached that decision and, equally, be pleased that the noble Lord, Lord Brooke, did not take the opposite view. Having heard his speech, I am quite satisfied that what he had to say was much more entertaining than what I shall say. However, what I have to say is very important in relation to the administration of justice in this country, though I emphasise that the views that I am expressing are entirely my own and not those of any section or number of the judiciary.
	The matter that causes me to rise is partly the fact that it is not until a judge such as myself has made pension contributions for 20 years that he will have the protection which the Bill provides. I rise also because one of my former judicial colleagues who is a Member of the House, the noble and learned Baroness, Lady Butler-Sloss, drew my attention to the assumptions made for Part 4. Those assumptions fairly draw attention to the risks involved in what is proposed. They do so in the following terms:
	"Key assumptions are ... that this measure will result in no behavioural response by the judiciary (e.g. no negative impacts on judicial recruitment, retention or performance)".
	That is a statement that I wholly accept in relation to performance, but I am concerned about its claim that the measure will have no impact on judicial recruitment or retention. The impact assessment continues:
	"Key Risks are: ... that the actual impacts of this measure are as yet unknown, as are the cumulative effects of existing and future policy decisions about judges' pay and pensions - such as the current pay freeze for judges ... that the assumed behavioural response might not apply and the measures may lead to negative impacts on judicial recruitment, retention and performance".
	The assumption, if it were right, would be very reassuring, but, on the basis of my experience as Lord Chief Justice only a few years ago, I sincerely question the assumption about retention and recruitment. That is the matter on which I want to focus.
	The noble Lord, Lord Freud, was absolutely right to stress the importance of fairness. There is an aspect of what is proposed which has a real degree of unfairness about it because of the particular situation of the judiciary. Perhaps I should preface what I am about to say by stressing just how important is the quality of our judiciary to the administration of justice in this country.
	The quality of our judiciary puts this country in a very enviable position. I know that the noble Baroness, Lady Noakes, raised questions as to what I might say, but I shall say it notwithstanding her comments. We have a judiciary which is admired around the globe; its standard is such that this country is looked to to give a lead in judicial administration in many parts of the world. I referred earlier to Lord Justice Brooke, my former colleague and the noble Lord's kinsman. He, for example, spends a great deal of his time in retirement helping the judiciary of many countries in the new democracies which find it difficult to adapt to the changed circumstances which now exist. In addition, in other jurisdictions, so valued is the judiciary of this country that it is invited to create courts. I was such a beneficiary and created a court in Qatar. This is a singular compliment to the judiciary of this jurisdiction.
	It is very important-this cannot be stressed too strongly-that we do not unintentionally affect the standards of our judiciary. One of its unique qualities is that the senior judges on the High Court Bench-who are an important part of our system-are recruited from those who have been at the practising Bar. When they take an appointment they make a great financial sacrifice to do so, and there will come a stage when they cannot be satisfied that the sacrifice involved will be a safe one so far as their families are concerned. So far, any change in their conditions would not apply retrospectively, which is why the 20-year provision is mentioned in the Bill.
	However, that is of no assistance to judges once they have taken an appointment. As the Minister will be aware, in this country, those taking judicial appointments are unable to go back to their former profession as barristers. That means that if the terms are changed after they have taken an appointment, they will not be able to regain the former high earnings that they admittedly had before they became a judge. I realise that members of the judiciary cannot expect sympathy for their position, but the judges are entitled to be treated fairly and to have confidence that, once they have taken an appointment, the rules of the game will not change adversely towards them.
	The Government must give the greatest attention to this because, in parts of the jurisdiction, there are difficulties today in recruiting High Court judges which did not exist in the past. From my experience as Chief Justice, I can tell the House that the attraction of the Bench to certain sections of the Bar is nothing like it used to be. I am relieved that, so far, that has not affected the quality of those recruited to the Bench. I accept that our judges today are as good, if not better, than they have ever been during my legal career. It is important that we do not do anything that puts that situation at risk. If we continue to chip away at the position of the judiciary, there will come a tipping point-although it is very difficult to identify when it will arrive-so the Government should think very carefully whether it is wise not to take some appropriate and fair steps to protect the position of the judiciary.
	As it happens, I read in the Times today of events in a celebrated case in Moscow, where there has been some question as to the propriety of what happened. The judge in the case was summoned to the senior court in Moscow, where a contributor quoted in the article reports her impression that he was going to get his orders for the conduct of a trial that was yet to take place. I am happy to say that no judge in this jurisdiction would respond to such an invitation, were they to get one. One of the difficulties if you are Lord Chief Justice is that you can give no orders to any judge as to what they do or how they do it in any individual case. The independence of the judiciary is absolutely critical-and it works, because of the calibre of person who is recruited.
	For those reasons, I urge the Government to look very carefully at what they are proposing to do and make sure that they are not taking a risk with our very fortunate position of being able to regard the judiciary as one that displays the proper degree of independence and of excellence.

Lord Falconer of Thoroton: My Lords, it is a privilege to follow the noble and learned Lord, Lord Woolf. I hope that your Lordships will listen to what he says. When I became Lord Chancellor, and he was Lord Chief Justice, I found that things went badly for me when I did not listen to him and that they went a lot better for me when I did. Like many noble Lords, I congratulate the noble Lord, Lord Freud, on the clarity and strength of his explanation. I also congratulate my noble friend Lady Drake. We are very lucky to have such an incredibly powerful team dealing with a Bill of this importance.
	I should also like to express my profound regret that the noble Lord, Lord Brooke-who participated in our debates on a Bill which we debated over the past 450 years, namely the Parliamentary Voting Systems and Constituencies Bill-did not deliver at approximately 3 am on one of those days when we were sitting late the same speech as he delivered about an hour ago. We would have enjoyed it immensely on that occasion.
	Perhaps I may make two preliminary points. First, I declare an interest: I might have close relatives in the future who will become judges and be affected by the Bill. I was also Lord Chancellor and the Bill theoretically could affect entitlements that I have. But I do not think that it does, for the reasons which the noble and learned Lord, Lord Woolf, outlined. Secondly, the Bill has an effect on sitting judges. My remarks are entirely my own. They have not been suggested to me by sitting judges.
	The issues that I want to talk about are judicial independence and the effect of Part 4-issues not touched upon by the noble Lord, Lord Freud, although they were touched upon by the noble Baroness, Lady Noakes, who said that she hoped the Government would not cave in like they did previously. I take pride in the fact that I was the caver-in on the previous occasion, and I believe that my caving in protected judicial independence and quality considerably.
	The constitutional points at stake here are very significant. The Bill represents an identifiable departure from the stance that the state has previously taken. Our constitutional structure is based on democracy and the rule of law, which ensures that individual freedom is protected, in particular against oppression by the majority, and depends on there being an independent judiciary, free from any interference, including and in particular from the Executive in the making of judicial decisions. Part of that freedom involves the Executive not having the power directly or indirectly to influence a judge individually, or the judges collectively, as a whole, whether by pressure before a decision or extracting a price after a decision has been made by the courts. The protection of judges from both direct and indirect interference by the Executive has been reflected in a series of statutory and non-statutory steps taken by the legislature and the Executive over the past 30 years to enshrine those protections.
	The obvious pressure point on the judiciary is judges' salary. Although the Senior Salaries Review Body looks at their pay, and makes recommendations, their salary is set by the Government. Section 12 of the Supreme Court Act 1981 specifies that judges' salaries shall be set by the Lord Chancellor in conjunction with the Minister for the Civil Service. Section 12(3) specifies that:
	"Any salary payable under this section may be increased, but not reduced, by a determination ... under this section".
	The purpose of the section is to avoid a Minister having the power to reduce the salary of the judges, either because, in reality, the Government are annoyed with a decision that a judge or judges make, or to give such an appearance.
	It is plain from Section 12 of the 1981 Act that the same protection does not apply to judicial pensions. Depending on whether the individual judge was appointed before or after 1 April 1995, a judicial pension is payable under either the 1981 Act or the Judicial Pensions and Retirement Act 1993. Neither Act contains an express prohibition on alteration or reduction in the terms of the pension. The current position, which applies broadly to all judges, is that they each have a non-contributory pension for themselves, but a scheme to which they have to contribute for their dependants' benefits.
	The effect of Part 4 of the Bill is that the appropriate Minister can, by regulations made with the concurrence of the Treasury, require existing judges to make contributions to their own pensions. Crucially, as the noble Lord, Lord Freud, said, that allows for the imposition of contributions for the first time in respect of the judges' personal pensions and, equally crucially, allows for their increase in those pensions from time to time. The effect of this, as the noble and learned Lord, Lord Woolf, said, is that judges who were employed and took up their office on the basis that they had to make no contributions for their own pension, on the basis of what the noble Lord, Lord Freud, said, will have to face some unspecified contribution. This is an obvious deterioration in their terms and conditions, made the more problematic for the individual judge for the reason given by the noble and learned Lord, Lord Woolf-namely, that while the Executive can change their position, the judge cannot change his or her position by returning to the profession that he or she left in order to become a judge. I should add that it is compulsory for a judge to be a member of the relevant judicial pension scheme, while the Bill specifies-under subsection (2)(c) of proposed new Clause 9A, which would be inserted into the Judicial Pensions and Retirement Act-that any contributions have to be made in,
	"the form of deductions from the salary payable",
	to the judge.
	The consequence of the Bill and the introduction of contributions from the judge to his or her personal pension is that there has to be a further deduction from the judge's salary, meaning that there will be a reduced salary paid to the judge without any commensurate increase in the benefits obtained. On the face of it, this is at the very least a breach of the spirit of Section 12(3) of the Supreme Court Act 1981, which prohibits any reduction in salary. There will be such a reduction because, as the noble and learned Lord, Lord Woolf, has pointed out, there is at the moment a freeze in judicial pay. Even if that is not a breach of that spirit, it is certainly a breach of the basic principle that it should not be open to the Executive significantly to reduce a judge's main remuneration.
	From my own experience as Lord Chancellor, I believe that this is a matter that most emphatically should be dealt with by the legislature, not by the Executive. I believe that the Executive instinctively understands that they must not interfere with the decision in an individual case. In my experience, when I was among them, no member of the Executive-official or Minister-ever sought to interfere with an individual decision. However, throughout the period when I was Lord Chancellor I was aware that the Executive were occasionally irritated with decisions that were made. It never led to anything, but individual officials and Ministers occasionally expressed the view that the judges did not understand particular positions or were not sufficiently understanding of the Executive's problems.
	The potential for tension between judges and the Executive has inevitably increased over the past 30 years, for two reasons. First, there is a great increase in judicial review, which means that the judges are more frequently challenging, and sometimes striking down, decisions made by the Executive. Secondly, the effect of the Human Rights Act is that there are more direct challenges to the state by the courts-not by challenging their decisions, but by having to make decisions in relation to them. That change can be seen from the fact that in the early 1970s the final Court of Appeal, which then sat in the House of Lords, dealt primarily with commercial and tax cases. If you look at the daily diet of the Supreme Court across the road now, you will see that it is made up of many more constitutional cases involving challenges to the Executive. The separation of the Executive from the legislature, and their different roles, has therefore become more important.
	I say in parenthesis, picking up on a point made by the noble and learned Lord-and referring not to Russia but to the United Kingdom-that I read an article in the Daily Mail last week which said that Ministers were furious with the courts because of their striking down the cancellation of some or all of the Building Schools for the Future programme. I have no idea whether Ministers were furious, but, as I say, I know from my own experience that Ministers and officials sometimes could be upset, and I also know that this upset with the courts was always misplaced. In the context of future decisions by the courts that are unfavourable to the Government, it might be possible to say that a decision to exercise the power proposed in Clause 24 had been taken in response to that set of decisions. That would erode confidence in the Executive's inability to interfere in judicial independence.
	What is the solution to this problem? In my view, the solution is to put a provision into proposed new Section 9A of the Judicial Pensions and Retirement Act 1993 that says that nothing in this Bill will allow an existing judge's pension entitlement to be reduced in any way, including by a right to impose or increase contributions where none are paid at the moment. The consequence of such a provision would be that existing judges' entitlement would not be affected. It would mean, however, that the Government would be entitled to introduce a contract for new judges that had a provision for contributions. In relation to new judges who are subject to a provision for contributions, it would not be open to the Executive thereafter to increase the level of contributions. The position would be that no judge sitting at the moment could have his pension entitlement changed. In the future, it would be possible for a new judge to have contributions introduced, but those contributions would be fixed. They could be reduced but not increased.
	That approach would exactly reflect the approach that the legislature has hitherto taken to salaries. It would take away from the state the ability to respond in any way to decisions that it did not like. I make it clear that I am not suggesting that this Government, or any future Government whom one can envisage, would do that. However, to give a Government that power in the future is to give them a classic tool with which to interfere with judicial independence. I agree with every word that the noble and learned Lord, Lord Woolf, said about the importance for our standing in the world not only of having judges of the high calibre that we have, but of having judges who-not uniquely, but unusually-are regarded as completely free from influence by the Executive. For the state now to introduce a provision such as this, which we would deprecate if another country introduced it, would be a great mistake.

Lord Boswell of Aynho: My Lords, the House has just heard, with great interest and respect, two most distinguished contributions by well known lawyers on the role of the judiciary and the Bill's impact on it. We will shortly hear from a third distinguished lawyer on the matter. I am sure noble Lords will be relieved if I say that I have neither the competence nor the temerity to engage in this argument. We have also heard from my noble friend Lord Brooke of Sutton Mandeville, who was kind enough to support me on my introduction to this House last year. He lightened the tone in the most splendid manner. It made me think that in an effort to build consensus across the coalition, if not across the House, on what is essentially a rather consensual Bill, I should declare a past interest in that my father did know Lloyd George, although they were never of the same party.
	Having said that, I was reviewing, as one should, my declarations of interests. The primary one, which I do not think I have heard from anyone else, is that I am a state pensioner. This means that my wife, who is in a similar position, and I are now immune to most of the measures in the Bill. We have passed the gateway. But perhaps more materially, I am also a trustee of the Conservative and Unionist Agents' Superannuation Fund.
	Beyond that, it might be of interest to the House if I throw in the fact that at one stage in another place I handled the Front Bench brief in relation to the initial pension credit legislation. However, I find it sobering-this is germane to the case-that with the complexity of the system which we now face, even given that measure of experience, when it came to the fine points of my own state retirement pension statement I was completely unable to interpret what it actually meant. I knew something about graduated contributions but it was only this week in connection with a new statement of my entitlement for next year, and with reference to Clause 2 of the Bill, that I discovered that I had a PUCODI that I never realised I had. I am delighted to say-it is a matter of a few pence-that it will continue in the future.
	I welcome the Bill-strategically, if not in every respect-in that it addresses three needs. First, it addresses the need to control the deficit, although, significantly, it will not do so initially, and not even within the period of the commitment in the coalition agreement to control it. However, it will build up to effect very significant budget savings of the order of £30 billion directly, plus tax and national insurance contributions of a further £8.5 billion over a decade. Those savings are some way away but are very significant indeed. Secondly, it begins to respond to the inexorable demographic process of an ageing but increasingly viable population with a rapid increase in life expectancy which has shaken every actuarial calculation. Remarkably, at the beginning of my political career, there were about 8 million pensioners but we are starting to talk in terms of having 14 million or 15 million within the lifetime of many of us in this House. Thirdly-this is rather qualified praise-the Bill effects some simplification in what I have already indicated is an overcomplex and unintelligible system for the lay person.
	As judicial pensions have just been touched on, I shall say no more about them. I do not intend to say a great deal about the arrangements for auto-enrolment although I am pleased that they have been widely welcomed. However, although we are nearly there, some aspects of the technical alignment of this-for example, some submissions I have seen from the British Chambers of Commerce-are entirely proper matters for discussion in Committee. Another area that concerns me-although I am not saying that we should reverse this into one of the functions of NEST, which has a great deal to do-is the whole question of small pots-which I find very vexing-which have been left behind for individuals, particularly but not exclusively for women. I am aware of one in my family worth £20 of pension per annum and another worth about £35 of pension per annum. They cannot be removed on the ground of triviality as that is being claimed somewhere else but they are very untidy and the administrative costs are unconscionable. We must hope that we will return to that issue in the future. What we are doing with NEST-though it will not always be easy and will introduce a burden for employers, including some smaller employers-is broadly sensible in view of the objectives of securing greater savings and availability which the Bill sets out.
	I remember from my early days in the pension credit world, to which I have referred, the moral hazard of encouraging people of modest means to save when any benefit from their deferred gratification may be matched, or even overcome, by the opportunities available-these are not related to their own saving-through means-tested pension credit. That destroys the moral basis for their contribution and may give rise to legal challenge later on. That is why I am attracted by the ideas that have been touched on in the debate, particularly by the noble Lord, Lord German, and have certainly been sketched in the press, that something should be done to consolidate the state pension at a higher actual level. Moving to a higher minimum level would provide a platform on which people's full NEST-directed or other-directed savings could build, rather than being subverted by a mean-testing system.
	However, the meat of the Bill in financial and policy terms lies in Part 1 on the state pension. We know that life expectancy is increasing even faster than the assumptions of the timetable of the 2007 Act. Even allowing for a completed move to 66 for everyone, within 20 years there may be another 2.5 million pensioners. Any Government would have to address this, even if the budgetary situation were better than it is today. I therefore support the principle of bringing forward changes to the state pension age. On fairness, we need to recognise the interests of those in the active labour market-taxpayers who have to fund these pensions when they are paid-and the overall gender balance effect. These issues have been touched on.
	That is not to say that there are not concerns-I share those concerns-about problems, particularly for a number of women in this transitional phase. It is simply unrealistic to pretend that any move to accelerate the system could be painless. However, we need to recognise-many of us across parties have campaigned on this for years-that the position of women in the pension system has generally been difficult. In fact, we have only just achieved 30-year entitlement. One or two cases of particular stress have been referred to-for example, women who have attained the age of 60, or will have done, who then discover that their pension is moving from them, rather like the fruit in the old parable whereby you never quite get there. I hope that in Committee we can look at some of the most direct effects, particularly on people who are seriously ill, to see whether something can appropriately be done about them. I recognise that cost is a real constraint. Trying to say that we have a problem that we will meet in full would nullify the Bill.
	Another constraint which has not much been touched on in the debate is the jurisdiction of the European Court in relation to potential discrimination. Although I would not wish it to do so, the court will look seriously at the issue of not aggravating a gender imbalance. However, I should like Ministers to consider whether they could meet at least part of the cost by transferring the balance from the female gender to the male gender and making an earlier start on moving the male pension age up towards 66 before 2018. In order not to destroy the principle in Europe, this could be done by ensuring that there was a progressive reduction in the differential between the male and female pension ages-that is, the female rate of withdrawal or of moving the contribution qualifying age would always be faster than that of males. That would be a reasonable package to put to the Europeans, saying, "We have a problem. It is an historic one. We also have an overall financial problem. Can we consider doing something slowly about the male approximation to 66, to which we know, as part of our programme, the female age would approximate in due course?". Such a proposal would be reasonable if it helped to provide some resources for the burden sharing.
	The overall message from this debate is that pension legislation is complex and potentially expensive and savings are not easy to get and have to be thought about well in advance. Somewhere along the way-although, as I have indicated, I am no lawyer-the words "reasonable expectations" chime in on this. However, I congratulate the Government on the concept behind their Bill and I look forward, because the devil is in the detail, to its detailed, objective and, on the whole, broadly consensual consideration.

Baroness Bakewell: My Lords, I want to contribute to this debate about the Pensions Bill from an entirely different angle. I have listened with fascination to, and taken note of, the forensic analysis of its clauses. I declare an interest; for almost two years, I was the government-appointed voice of older people. In that time I received hundreds of letters, and it is those voices that I bring with me to the Chamber. I regret to say that I did not have many letters of complaint from the judiciary.
	The terrible news this morning from Health Service Ombudsman, Ann Abraham, which detailed the shocking treatment of old people in some national health hospitals, indicates the need for a total rethink of how we regard the old. We all know that populations are ageing. We should celebrate that fact as it is a major achievement in human development. Advances in medicine and hygiene, and the triumph of lifestyle changes such as the decline in smoking, have converged to make a major change in my life expectancy and that of everyone else. The human race is living longer. By 2050 the number of people around the planet over 65 will have doubled. This change is on a par with climate change, and will interact with climate change to shape the future of life on this planet.
	Rather than see the phenomenon as a wretched burden on society, we should welcome the old as a major new resource: an extra generation fit enough to work longer and contribute to the economy that supports them, as well as a major market for new technologies and services that promote well-being, independence and social interaction. That is the good news.
	The bad news, which today's report on old people's health endorses, is that we are far from seeing the old as valuable, often capable and willing to work, planning carefully for what they expect their retirement to bring, and deserving of the same dignity and respect as the rest of society. From now on, issues concerning the old-their employment, housing, social care and transport-will come for consideration before your Lordships again and again. The planning of pension provision is merely a very important and leading adjustment that all of us will have to make to these sensational changes.
	It is important that we get the emphasis and the attitude right from the start. The default retirement age is already on the way out. If older people wish-and many do-they may stay in work for as long as they are able and needed. They will be needed. The economy cannot support a population most of whom spend one-third of their lives in state-supported retirement. Planning must be overarching. Let us consider the numbers. In May last year, nearly 12.5 million people were claiming state pensions. The UK spends 5 per cent of its GDP on pension benefits, which is less than most other countries in Europe.
	The names of Lloyd George and Beveridge have bounced around the Chamber today. William Beveridge advised Lloyd George on the first old-age pensions. Your Lordships will remember that when later he advised on national insurance in 1942, he listed the then five great evils: want, disease, ignorance, squalor and idleness. Times have changed. If Beveridge were to come back and address issues facing the old, he might well suggest five new giant evils. I believe that they are poverty, isolation, discrimination, injustice and neglect. Three of those considerations converge in the provisions of this Bill: discrimination, poverty and injustice. We would do well to consider them closely, for they will occur again as we struggle to deal with the unprecedented social change that is upon us.
	On discrimination, 25 years after the Equal Pay Act, whose intentions we now know have not been fully realised, I little thought to find women confronting a brand new form of discrimination. I thought that the public will had moved on and that the very suggestion that such a new discrimination could happen would be howled out of court. Yet such discrimination exists in accelerating the extended pension age to 66 by 2018 in the interests of righting another discrimination, which we acknowledge existed when women were allowed to retire at 60 and men had to wait until 65. That was discrimination and we are pleased to see it go, but not when another discrimination is brought in to make it possible.
	We know why this arises, and it is very understandable. It arises because the trajectory of a woman's life differs from that of a man's. It almost cannot be otherwise. For the best of all possible reasons-reasons applauded by society-women who are now in their fifties took a break from their working/earning lives to bring up their children. Society applauds such a move. It required their making financial sacrifices at the time, but those sacrifices were made willingly and within their own capacity to plan and anticipate their family finances. The Bill penalises them for doing that. It confronts them with having to wait longer than they thought before they get their pension and with little time or resource to do so. It is not just women who recognise that as discriminatory.
	The next great evil facing the old is poverty on a very wide scale. A higher proportion of women in the workforce have low-earning jobs. Pensioners from black and ethnic groups are more likely to be in poverty that white pensioners. Forty-nine per cent of Pakistani and Bangladeshi pensioners already live in poverty. Many women, as we have heard, struggle to do several jobs over the same schedule in order to provide for their families: their existing earnings are at a stretch. They may well be caring for both a younger generation-their own children-and an older one, their ageing parents. They are caught in a generational bind. Yet some of them-33,000, according to the Minister's own figures-face the sudden prospect of needing to fund up to a two-year delay in their entitlement to a state pension. They must wonder how they are to do that and how that situation arose. There is no scope, no space, no time and no opportunity to earn a little more or to set even a little aside each week to ease that transition. They face the gentle but implacable squeeze of poverty. Up to 2.6 million women will be affected by the additional time they have to wait for their state pension.
	The third evil is injustice. Many of the old are already seized by a fear of what lies ahead. They sense that they are getting a raw deal. I receive letters all the time in which the same phrases are used: "I have worked hard all my life. I have paid my taxes. I have cared for my family. I have taken hardly any holidays. And yet now I am to be hit by this pensions ruling. It just isn't fair!". There is widespread bitterness among many old people that the young have no idea and simply cannot imagine how anxious and distressed old people are at not being treated justly. There is alarm among them that many younger people think that the old have never had it so good and have lived lives of comfort and ease, while they struggle with changing financial pressures. But there are millions of older people who have led steady, responsible lives, caring for their families, honouring their communities, and they expect to be treated justly as society adjusts to the changing demographics.
	As I said when I began, the old are increasing in number and they are alert, active, thoughtful and outspoken. They are looking to this Bill to help society to adjust to the changing demographics. They feel that they are in a van of social change and yet they are the victims of it. When making changes to the Bill, I ask the Minister to consider those injustices and discriminations against women and the poor.

Lord Mackay of Clashfern: My Lords, I have listened to many fine speeches on the Bill. I congratulate my noble friend on the way in which he opened for the Government and the noble Baroness, Lady Drake, on the way in which she opened for the Opposition-very clearly and very plainly. If anything is plain it is that this Bill faces huge difficulties. Some of these have been highlighted very clearly this evening. It is very good for us to have the opportunity of hearing these problems because the problems that confront the Government in this area are extremely great and very difficult to cope with. A suggestion, which occurs to me as attractive, is the one which would join a substantial increase in the state pension with these changes. That may or may not be easy. I must declare an interest in the Bill as a former Lord Chancellor, a former Lord of Appeal in Ordinary, a former judge of the Supreme Court of Scotland and a current state pensioner. As I understand the Bill, it does not affect me financially in any way whatever.
	It is about 18 years since I introduced the Judicial Pensions and Retirement Bill to this House. The days between its introduction and its enactment were not the happiest of my life. The principle that a serving judge shall not have his terms of service adversely affected without his consent during his term of service is a fundamental principle, part of the rule of law and internationally recognised. It has been followed by Governments in this country, so far as I know, as far back as I can tell. When I came to introduce the Bill to which I have just referred, I made it plain that it did not affect serving judges. Those who were already serving judges were not affected by the Bill, which was introduced in 1992 and passed in 1993, except that they were given an option to enter the new scheme if they wished, and some did so.
	However, serving judges were not affected in any way. The reason for that was not because the Government did not want to change things quickly-I remember one of my colleagues saying that we would have to wait a long time before the pension provisions in the Bill took effect. The Government wanted to see change immediately-there is a certain aspect of that in politics which perhaps we should try to resist-but the Bill did not affect any of the serving judges, many of whom were not old; it affected only those who were appointed after it became law. That is fundamental and requires to be observed in this Bill.
	The truth is that the newly appointed judiciary has quite a high turnover. It does not take all that long-although longer than my colleague would have liked-for the new regime to come completely into effect. There are some, but very few, existing judges who are under the 1981 system.
	The noble and learned Lord, Lord Falconer of Thoroton, referred to aspects of this provision which are enacted. I think that he referred to the Supreme Court Act. He himself changed the title of that Act to the Senior Courts Act, but the statutory reference is perfectly plain, because when we had a new Supreme Court we had, needless to say, to change the title of the old one.
	As I said, that was the provision that we made, and I believe that it is the right one. The question about what happens to new judiciary is of course not trammelled in any way by that. The noble and learned Lords, Lord Woolf and Lord Falconer, referred to the considerations that apply to that. I cannot get into that, because that is the area where I suffered a lot in 1993, when I was told that if the new regime of 20 years instead of 15 was introduced, we would not get any judges at all, or the ones that we would get would be people who were not worth having. That is perhaps a slight exaggeration of the way it was put, but it was put very strongly, I can tell you, and lasted for quite a while. The fact is that it did not adversely affect recruitment-at least, not as much as was suggested; I think not at all, but that is my view of the matter.
	If that fundamental principle is to be observed, as the noble and learned Lord, Lord Falconer of Thoroton, said, it is necessary to restrict the operation of Clause 24, which makes an insertion after Section 9 of the Act, to those who are appointed after the Bill comes into effect.
	The second point made by the noble and learned Lord, Lord Falconer of Thoroton, was about the contributions to be required of the more recently appointed judges. I do not think that it would be right to allow the Executive to increase them by order, but we could well have a formula set out in the statute which increased them-for example, in relation to the indices presently in question which concern how pensions are uprated. Some such statutory formula would be open. As I said, there would be a question about the effect on recruitment, but that is an open question on which people could have very different views.
	That is all I want to say; it is a very simple point and the only one I really want to make. I think that it is a sound point that the law-the constitution of our country-requires that, once a judge has become a serving judge, his terms of service cannot be altered adversely to him without his consent. To give effect to that in the Bill would require a minor amendment-a small amendment in its scope-but an important one.
	My attention has been drawn to some other problems about additional voluntary contributions and so on, but those are very subsidiary. I want to stick on the principle, which I think is an extremely sound one. My noble friend Lady Noakes says that I should not listen to the lobbying of the judiciary and must not cave in to it. I am not listening to the lobbying of the judiciary; I am applying a principle which we applied when we put our Bill in place and which I believe should be respected today.

Baroness Donaghy: My Lords, we are reaching the end of the debate; I am conscious of the time and the ground covered. I will confine myself to one part of the Bill. In doing so, I associate myself with all the remarks made by my noble friend Lady Drake and congratulate her on her contribution.
	I want to deal with the proposal to raise the salary level at which someone is automatically enrolled to £7,475 a year, with a future possibility of increasing that threshold. For 30 years, I represented low-paid workers. I was a member of the first Low Pay Commission and, as one of the European social partners, I was part of the team that led to the adoption of the part-time workers directive in the 1990s, so I want to focus on the threshold because of its impact on the low paid. Too often, we spend time here talking about people with careers; I want to talk about people with jobs.
	I appreciate that the proposal is a result of a recommendation by the independent review which was published in October last year. The review team also considered whether the smallest employer or the older worker should be excluded, whether any changes to the proposed regulations, such as a three-month waiting period, would help, and whether simplification of the scheme, such as self-certification, would be advisable. My guess is that there was some negotiation within the review group on these areas and the lowest paid and casual workers lost out. I appreciate that the threshold of £15,000 was rejected by the review group, and I am grateful for that, but the proposed threshold of £7,475 this year, possibly rising to £10,000, might exclude those who have a series of jobs, some seasonal, some multi-site jobs with different employers. It might be neat and tidy, as some noble Lords have said, to fix on the income tax threshold, but that threshold is a political decision, not one based on need.
	The CIPD, of which I am a fellow, conducted a survey last week indicating that 65 per cent of staff in the private sector are not saving in a company pension. This shows all too graphically the scale of the problem in future and surely argues for fewer exclusions, not more. Anything that is linked to an income tax threshold will mean that an individual's pension future will be tied to the varying political whims of successive Governments. We need a plan that will last for 40, not four, years. If the threshold increases to £10,000, 1 million to 1.5 million people, mainly women, will be excluded.
	When I first started work at the University of London in 1968, I was excluded from the occupational pension scheme, along with all my immediate workmates. In my case, it was because of a two-year eligibility requirement. In other cases, it was because they were part-time and, for the rest, it was because they were not earning sufficient to qualify for entry at that time. I was the lucky one because at least I got in eventually. Those who stayed and retired in the past few years did so on a reduced pension because of the obstacles placed in their way a lifetime ago. I sometimes feel as if this is where I came in.
	We should not assume that low-paid people are stupid and do not want to plan for the future or make short-term sacrifices for long-term benefit. The lowest-paid men and women will be excluded from automatic enrolment not just for administrative convenience but because, I still believe, there is not sufficient appreciation in the UK of the impact of low pay on millions of people. When we talk about poverty, it is too often focused on benefits, tax credits and other forms of support. We should also be focusing on lower-paid workers and enabling them to plan for the future. I urge the Minister to reconsider his proposal to raise the threshold for eligibility and to put people on the right road to help themselves to secure their own future.

Lord Flight: My Lords, it is clear that much of this Bill is about tidying up so the Bill should command cross-party support. I will make three points that have not been fully brought out in this debate.
	The first point is the need for a national savings policy. For many of the rising generation, pension saving has become almost a dirty word. It might be no bad thing if they are saving for their retirement in other ways; as has been commented, ISA savings have increased dramatically in relation to personal pension saving. It is fine to clean up the legislation that we have, but there needs to be a framework so I hope that the Government will come forward with a national savings strategy in due course. Following on from that, the Government should not be surprised to find that both employers and employees have pretty strong motivations for opting out of auto-enrolment to the extent that that will be possible.
	Another big point, which has been made in different ways by many others, is that the Bill merges retirement ages but does nothing about the planned date of 2046 when the retirement age will rise to 68. Many would share my view that the projected longevity argues for the retirement age to rise much in advance of that and, possibly, to rise to the age of 70. I have campaigned for some time for the neat quid pro quo of a much more generous state pension at 70 that would merge the two different main and secondary pensions that are now available but would be well above the minimum income support level of pension credit. That would be a fair way of balancing the two. I also feel that pension credit has demotivated pension savers. You could get rid of all forms of the obligation to buy an annuity as well if the state pension at 70 was adequate.
	A third territory, which my noble friend Lord Boswell mentioned, is that the Bill tackles the obscure territory of GMPs and PUCODIs. I regret that I am not yet entitled to either. Apart from this being something like the Schleswig-Holstein question, there is quite an important point to be made about GMPs. I have a GMP and I know what it is and where it sits, but I have yet to find anyone who has one who even knows that they have one. As Members of the House will know, in essence a GMP is an entitlement when an individual ceases to be a member usually of a DB scheme that has contracted out. As far as I can see, pension schemes often do not keep up with the addresses of members who are entitled to GMPs and do not to write to people about them. I do not know precisely what legal requirements might be missing, but this is a practical issue and there ought to be, if there is not already, a clear legal obligation to keep people advised.
	I congratulate my noble friend Lord Freud on his very clear presentation of a difficult Bill. The Bill should command support, and I think that we will have other issues to deal with when the Finance Bill comes before the House.

Lord McKenzie of Luton: My Lords, this has been a powerful and exceptionally well informed debate that was enlightened yet further by the great sweep of history from the noble Lord, Lord Brooke of Sutton Mandeville, with his insights into actuarial practice in the EU. I, too, congratulate the noble Lord, Lord Freud, on the manner in which he introduced the Bill and the very clear way in which he set out its contents. He reminded us about the golden years under a Labour Government in 2006. I am especially pleased to have heard from the noble Lord, Lord Boswell, because he actually has a PUCODI. I have been seeking someone who has one for a long time, and what I thought was going to be a fairly sterile and short debate in Committee will, I think, be much more extensive, as I am sure the Minister will attest. Like many others, I also congratulate my noble friend Lady Drake not only on a very impressive first appearance at the Dispatch Box but on her incisive analysis of why we have concerns with this Bill.
	The Bill seeks to address the right issues-increasing longevity and undersaving-but in a way which we cannot fully support. Fundamentally, we consider accelerating the equalisation of the state pension age for men and women to be unfair. Of course, we recognise that life expectancy has increased beyond the 2004 projection, as spelt out by the Minister, and we adhere to the Turner commission proposition that intergenerational fairness argues for the proportion of adult life spent in receipt of state pension to be broadly constant. That would be catered for as much by the approach we support as by the Government.
	It is our view that the existing timetable for equalisation of the state pension age to 65 should be left unchanged and that the increase to 66 for men and women should take place between 2020 and 2022. We accept that it would also be necessary to review the subsequent timetable for increasing the state pension age to 67 and beyond. Perhaps we could make common cause on that with the noble Baroness, Lady Noakes, and the noble Lord, Lord Flight, although whether we would end up in the same position is another matter. The noble Lord, Lord Boswell, opposed the suggestion about accelerating the state pension age to 66 for men but not for women, but there are issues within the EU about that.
	It is to our disappointment that we could not have consensus on this Bill. Had the coalition Government stuck to their commitment that the date at which the state pension age for women would not start sooner than 2020, we could be at one-a point pressed by the noble Baroness, Lady Greengross. Now, as we have heard, some 300,000 women will have to wait for between 18 months and two years longer to receive their state pension. This means that they will lose up to £10,000 in pension income and more if they are eligible for pension credit.
	The timeframe within which these changes are to take place will make it very difficult for women to mitigate their loss. Women are less likely than men to be in private pension saving and have fewer financial assets to bridge the gap. Some have caring responsibilities and will have left the labour market having anticipated their state pension at a certain date. Those women are now faced with the dilemma of seeking to rejoin the market when employment prospects are particularly weak. My noble friend Lady Bakewell referred to these issues as issues of discrimination, poverty and injustice.
	However, dealing with these matters in terms of percentages, aggregates or cohorts belies the fact of the change on individual lives. We have heard the stories from my noble friend Lady Hayter about how individual women will be affected and we have heard powerful reasons why the Government should stick to the legislative timetable for equalisation. The noble Lord, Lord German, offered us some mitigation if the Government are not to change their position around pension credits and in addressing those who are seriously ill. Perhaps we can seek common cause in Committee on that, but that does not address the fundamental unfairness in the Bill.
	None of this unfairness can be claimed to be in the cause of eliminating the deficit by 2015, as the savings from the Bill would not begin to accrue until 2016-17. We accept that holding to the existing equalisation timetable would reduce the savings, but fairness has implications. That would mean that more would be borne by the working age population, but it would still give rise to savings of some £20 billion, including additional tax receipts of about £8 billion.
	We have heard from the Minister about the triple lock and the relinking of the basic state pension with earnings in 2011, which is earlier than required by legislation. However, on the basis of Treasury forecasts-a point made by my noble friend Lady Turner-it looks likely to be 2013 before earnings become the highest of the three components of the lock. With the switch to CPI, it is possible that pensioners will be no better off and that some may be worse off under the lock than they would have been had there been continuance of uprating in line with the RPI.
	As many noble Lords have said-everyone who has spoken, I think-we strongly support the coalition Government's decision to proceed with auto-enrolment and with NEST. Indeed, why would we not? The proposals were created on our watch: my noble friend Lady Drake was a member of the Turner commission and was later chair of PADA; my noble friend Lady Hayter served as a trustee of NEST; and my noble friend Lord Myners was chair of PADA. We are, as it were, up to our necks in it. The prospect of between 5 million and 8 million people newly saving, or saving more into a workplace pension, is a profound change that will allow millions of workers, who never had the chance previously, to build up their own pension and give them an opportunity to save.
	Of course, auto-enrolment will not transform matters overnight, but it is part of a broader pensions settlement, grounded in the intellectual rigour of the Turner commission. That settlement proposed improvements to the basic state pension, especially improved access for women, accelerated the flat-rating and simplification of S2P and proposed the imperative to redress market failure through the creation of a national low-cost saving scheme, which is now NEST.
	The Turner commission's analysis holds good and is not fundamentally disturbed by the Bill. The noble Lord, Lord Stoneham, made that point. The practical ramifications of that analysis have been subject to compromise-for example, the cap on contributions, the contribution levels, the staging and phasing and the restrictions on transfer-and not everyone has been happy with the outcome. We may have a difference of view with the noble Baroness, Lady Noakes, for instance. However, the Bill disturbs that compromise and tilts the balance in favour of employers and against participation of the lower paid. The Government deserve our support for resisting the clamour to remove micro businesses from its scope and to exclude older workers. However, setting the trigger, as we have heard, at the personal allowance threshold for income tax denies 600,000 people-nearly half a million women-the opportunity of auto-enrolment. More worrying is the concern expressed by my noble friends Lady Drake, Lady Donaghy and others about the start of an upward movement of the personal allowance, which will be tracked by this trigger. Should the trigger reach £10,000, 1.4 million people will miss out on auto-enrolment. Linking the entry point for auto-enrolment to the primary threshold for national insurance is more appropriate.
	Our further concern, voiced by several noble Lords, is the introduction of an optional waiting period of up to three months before employees are auto-enrolled. While we see the benefit of not having to enrol individuals who up and leave quickly and opt out of pension savings, there is another side of the coin: seasonal short-term working may be the pattern of somebody's working life and they could miss out completely. Even if not, as we have heard, the number of job changes routinely undertaken during a lifetime will mean a significant period when an employee will have to opt in to gain continuity of saving.
	We will explore these matters further in Committee and seek reassurance from the Minister that the application of the easement will be monitored. It is claimed that one of the benefits of a waiting period is fewer small pots, an issue which my noble friend Lady Hollis has rightly continued to pursue. To a certain extent, this is solved by the use of NEST, where employees automatically collect their pension pots from a range of different employers. However, that solution does not cater for circumstances where the providers chosen are other than NEST. We support my noble friend in her exploration of whether small pots might be collected together in NEST at the point of retirement, a matter pressed also by the noble Baroness, Lady Greengross. My noble friend rightly revisited the opportunities to amalgamate earnings from mini-jobs for the purposes of national insurance credits, qualifying earnings and, now, the trigger.
	What is the Government's position on changes to the rules on NEST which would allow transfers into the scheme? What is their position on removal of the cap on contributions into NEST? On a more general point, how will the rules which allow pension contributions to be deducted in computing tax credits be carried forward to the universal credit?
	The issues around self-certification have proved intractable in the past. The challenge has been to facilitate sensible mechanisms to encourage employers to stay with existing good provision provided that it has delivered at least the equivalent of 8 per cent on qualifying earnings without employees who should be auto-enrolled dropping through the net in large numbers or systematically. Consultation on how this might work is being undertaken, but we are unfortunately unlikely to see it brought to a conclusion by the time that we have finished our deliberations. Unless these matters are clear, there are those who would seek to use the rules to circumvent the auto-enrolment requirement. Evidence, if it were needed, can be found in attempts to exploit the differences in trust-base and contract-base refund rules, although we are pleased to see that the Government are on this particular case.
	On judicial pensions, a matter spoken to by the noble and learned Lords, Lord Woolf and Lord Mackay of Clashfern, and my noble and learned friend Lord Falconer of Thoroton, I am aware that there is sensitivity and history surrounding this issue. If I were not, I was woken up to it pretty quickly. When I raised the issue with a couple of colleagues and said that judicial pensions were on the agenda in the Bill, there was a sharp intake of breath and I was told , "You're on your own". We all agree that we are incredibly well served by the judiciary, although I cannot speak from personal experience on the matter. The issue of public service pensions has been most recently addressed by the noble Lord, Lord Hutton of Furness. His interim report was issued in October and we await his final report. The interim reports recited that the best way to make savings would be to increase member contributions but to protect those on lower earnings. Can the Minister let us know how the Government's acceptance of the recommendation is to be implemented and within what time frame?
	Clause 24 is an enabling measure and, in principle, has our support. It cannot be right to exempt judicial pensions from the financial discipline which is to be applied to other public service schemes. However, changes must, as for all public service schemes, respect accrued rights. It is important also, as the noble and learned Lords contend, that these matters proceed in a manner that does not impair the independence of the judiciary.
	Time does not permit a review of all the other essentially technical changes in the Bill-we will pick up on these in Committee-but perhaps the Minister can help us on one point raised by several noble Lords. Paragraph 3 of Schedule 3 seeks to introduce some flexibility into the arrangements for consolidation of S2P. There seems to be nothing in the Bill to address the much heralded consolidation of the basic state pension and S2P on the way to a £140 basic pension. That was referred to by the noble Baroness, Lady Greengross, my noble friend Lady Hollis, and the noble Lord, Lord Stoneham, who said that he has had some engagement on this with the Pensions Minister. Can the Minister update us on this and say when we can expect firm proposals?
	A further issue of significance, which the Bill addresses in part, is the consequences of the switch from RPI to CPI in determining the general level of prices for revaluation and indexation purposes. The major impact of this on occupational pensions will, as the Minister said, be delivered by order and not by the Bill. From the Government's point of view, this seems to be yet another item of work in progress as their consultation is not due to close until the beginning of March. Can the Minister let us know when the responses will be shared with us? The impact assessment has also become a bit of a moveable feast by some £20 billion in the space of a few days.
	We have generally signalled our acceptance of the switch to CPI for uprating benefits, not necessarily as a permanent change but for a period while the deficit is being addressed. We will continue to examine the appropriateness of CPI as currently configured as a suitable measure for inflation compensation purposes.
	We have much to discuss in Committee but our efforts will be focused on seeking a reversal of the unfairness at the heart of the Bill. That unfairness goes against the grain of recent pension legislation, which has been to redress the historic discrimination that women have faced in the pension system. However, the Government will have our support-if not uncritical -in taking forward the auto-enrolment proposals.

Lord Freud: My Lords, I am not surprised that this has been a fascinating and very well-informed debate. I particularly congratulate the noble Baroness, Lady Drake, on her speech. The noble Baroness, Lady Hollis, said she was looking forward to seeing her noble friend on the Front Bench, and I have to say that that speech left us with the same view. The noble Baroness is very welcome over here-in fact she could do some of this for me. A huge number of points were raised and, to be honest, I have no chance of dealing with all of them in the time available to me. However, I know that we will be dealing with them in great depth in Committee.
	Let me go back to the core issue around the acceleration in the pension age. We have been left with a record structural deficit and we need a sustainable system that works fairly for current and future pensioners. The argument comes down to simple financial discipline. Spending on state pensions in 10 years' time will be nearly £26 billion higher if we leave the timetable unchanged. That reflects a mounting financial pressure on the working population. We cannot spend money we do not have. Just as we have been clear on our intention to restore the public finances in the short term, we are also determined to do so in the medium term. In 10 years' time there will be nearly a quarter more individuals over the age of 65-what will we do for them then? "Sorry, there's no money", is not an option when it comers to dealing with people's security in retirement.
	As I said in opening, people are living longer, and rapidly longer. We are trying to deal with the bubble that my noble friend Lord German talked about-the beneficial bubble of living much longer. The new pension age will reduce pressure on public finances by around £30 billion between 2016 and 2026. Automatic enrolment will result in £9 billion a year in additional workplace pension savings by individuals. These are significant numbers and they represent real cash value for the individuals of this country.
	Let me deal with the issue raised by a large number of noble Lords. The noble Baronesses, Lady Drake, Lady Greengross, Lady Hollis and Lady Bakewell, and my noble friends Lord German, Lady Noakes, Lord Stoneham and Lord Boswell, talked about women in their 50s facing longer in the workplace. The fundamental argument runs along these lines: those people who have enjoyed this dramatic increase in longevity should help to fund their pensions. As the Minister for Pensions said in another place yesterday, if we wait until 2020, when the current equalisation timetable is completed, overall savings will be reduced by £10 billion. That represents an extra £10 billion that the working-age population will have to find.
	We have heard some figures relating to the women affected-300,000 facing another 18 months or more and 33,000, right at the edge, facing two years more before they get their state pension than they might have excepted. However, 70 per cent of these women are currently working and this measure encourages them to continue working. Some of them have retired early and have a pension enabling them to do so. Some of them have independent means. Clearly, some of them will need to be supported by the working-age benefit system, which is not as generous as a pension but nevertheless represents a support network. People are working beyond the age of 65. Some 900,000 people are doing, which is twice the number of a decade ago. Indeed, 60 per cent of people in their fifties say that they would like to continue working after the state pension age.
	I come to what the noble Baroness, Lady Hollis, called Hamlet without the prince-what is happening with what has been called the single tier, which the noble Lord, Lord McKenzie, the noble Baroness, Lady Greengross, and my noble friend Lord Stoneham also raised. Last year, the Chancellor stated that the Treasury is working with the DWP on potential pension reform to simplify pensions and provide a boost for pensioners for many years to come. I am not in a position to update that statement, but it is still extant. I hope and expect that we will return to this topic in our debates, when I will be able to update noble Lords.
	My noble friend Lady Noakes pressed me on further moves to raise the retirement age beyond 66 to 67 and 68. Once we have got the increase through to 66, we will start to consider further increases to state pension age to manage the ongoing challenge that we have, represented by increasing longevity. The idea of an automatic mechanism to raise it is attractive superficially but, in practice, some wider issues need to be looked at in this fiscal situation. With the level of healthy life expectancy, it is probably not the most obvious way to go.
	A lot of issues have arisen on automatic enrolment. I deal first with the waiting periods, raised by my noble friend Lord German and the noble Baronesses, Lady Greengross and Lady Turner. The employer will be required to provide an individual notice to individual jobholders. It must inform the jobholder that the employer intends to use a waiting period, the jobholder's new automatic enrolment date and, importantly, their right to opt in to the employer scheme during this waiting period. We are very conscious of the need to ensure that there is adequate information.
	Many noble Lords raised the new threshold at £7,475, including the noble Baronesses, Lady Drake, Lady Hollis and Lady Hayter. We are setting that level after looking very closely at replacement rates, among other factors. We have not committed to chasing up the tax threshold figure with that rate. That is a decision that will be taken independently of that. Several noble Lords made the point about increasing exclusion if we were to raise that rate. Those are the issues that we will have to deal with when we take those decisions. We will discuss them in this forum, I suspect.
	The noble Baroness, Lady Drake, raised a point on loopholes in certification. Simply put, we are not complacent about that. We will be watching it very closely and we will monitor the trends. If we see that certification is being abused, as the noble Baroness is concerned about, we will have the power to strengthen the requirements and ultimately to repeal the legislation.
	Several noble Lords-I am thinking of my noble friend Lord German and the noble Baroness, Lady Hollis-raised concerns about small pots and orphaned assets. Clearly, those little bits of irritating money are a major issue when they are stuck all over the place and cost you more to get out than to enjoy. We are considering the long-term implications of automatic enrolment; that is one of the issues. The DWP is currently working with HM Treasury, HMRC, the FSA and TPR, as well as with pension providers, to identify what additional work may be needed to address small pension pots. Our call for evidence on regulatory differences, which we published at the end of last month, also seeks solutions to address that. It is a real issue.
	The noble Baroness, Lady Hollis, raised a question about early access to pension funds when one has small amounts of savings. As she will be aware, the Treasury has been conducting a public call for evidence on this issue. I listened to her remarks on that area with interest. I am sure that my Treasury colleagues will, too. If they do not, I will pass on the issue.
	Perhaps I might deal with the question that my noble friend Lord German asked about including housing costs in the CPI. There are actually some housing costs in the CPI. However, mortgage interest payments are not in that but in the RPI. That is the way that the RPI deals with housing costs. There is work going on currently to look at how and whether housing costs could be taken in a less distorting way into the CPI. It is likely that that work would come out to a movement in the actual price of houses going into that particular index. The ONS is looking at that; the work is still at a relatively early stage and we expect it to take about two years, but it is entirely possible that that criticism of the CPI-about it excluding too much on housing-could be eroded.
	I tread with great trepidation on the matter of judicial pensions, seeing people with scars all around me here. I shudder to take some of the wounds that they must have suffered in the past but perhaps I might deal very neutrally with some of the issues raised. We do not believe that taking personal contributions from judges amounts to salary reduction. Gross levels of payment will remain unaffected. We accept the argument made by all three noble and learned Lords that the independence of the judiciary is at the heart of our constitutional arrangements. There are a number of ways in which this independence is maintained including, clearly, salary protection for judicial officeholders. Salary protection does not prevent the payment of income tax or contributions that judges already make to pensions for dependants' benefit.
	The point that the noble and learned Lord, Lord Woolf, raised about recruitment and retention is clearly one that we need to maintain a very sharp eye on. We will monitor the effects of this measure. I recognise the roles of the heads of the UK judiciary and the judicial appointments bodies in questions of morale and recruitment. However, there is a very basic point here. It is right that judges should face the same restraints as other public service pension scheme members. There is a clear reason for introducing member contributions-to ensure a fairer distribution of costs between taxpayers and members so that the schemes remain affordable.
	The noble Baroness, Lady Drake, asked when regulations will be available. We recognise the need to provide certainty as soon as possible. We will formally consult on the regulations immediately following Royal Assent. We will also consult informally on draft regulations in late April and early May.
	The noble Baroness, Lady Hollis, asked about mini-jobs. She made a very valuable suggestion when we had a conversation about whether we can use the universal credit in relation to smaller, part-time jobs that add up to earnings above the threshold. That is a very interesting idea. It applies only to around 50,000 people at the moment, mainly women. However, our universal credit plans will increase the number of part-time workers by around 250,000, so that figure could be raised by a lot.
	I am hurrying because there is so much that I would like to deal with. I will deal with a couple of points raised by the noble Lord, Lord McKenzie. I am not enamoured of him at the moment because he raised the issue of PUCODIs. I had begged him to keep quiet about them because I do not want to have to understand them, although I will if he insists. The latest position on the NEST contribution cap is that while we welcome the recommendations of the review, it is not the right time to legislate or carry out a review of the annual contribution limit for NEST. We will look at that review, as the noble Lord knows, in 2017. Similarly, it is much more sensible to wait until 2017 to look at the position on transfers into NEST. Those two issues will be dealt with once NEST is working. It is, after all, the largest experiment in asymmetric paternalism that the world has ever seen. We can afford to find out what it is doing and make adjustments at that stage.
	As previously mentioned, this is a Bill of many parts, some of which may not seem to fit naturally together. In a way, that is not surprising. Pensions span a person's lifetime, from saving on entering the job market, through planning and preparing in middle age, to enjoying retirement in later life. All those are factors across the piece. There is no one place that pension provision does, or should, solely sit. Therefore, the Bill recognises that the pension system needs to reflect this. As the demography of the UK has shifted, we have had to reassess our current structure and amend existing legislation accordingly. This Bill puts sustainability and fiscal responsibility at the heart of its measures. I commend the Bill to the House.
	Bill read a second time and committed to a Grand Committee.

House adjourned at 7.35 pm.
	Correction
	In Division No 1 on 8 February, Lord Briggs should not have been recorded as voting Content. The record of the Division should state that the Tellers reported 262 names, but that the Clerks recorded 261 names.